Earnings Preview: Oracle, FedEx Could Sway Market; General Mills Should Beat Expectations

Next week will be one with very few market-impacting scheduled events. The Federal Open Market Committee will hold a two day meeting on Tuesday and Wednesday. Rates are expected to remain unchanged, though the statement will be analyzed for any mention of the problems in the subprime market.

Just slightly more than 70 companies are expected to report earnings next week, 11 which are members of the S&P 500. Oracle (ORCL) and Fedex (FDX) might have influence on market direction. The remainder, such as Nike (NKE) and Darden Restaurants (DRI), will grab some headline attention, but probably won’t have much impact outside of their respective sectors.

February housing starts will be released on Tuesday, the Conference Board’s leading indicators index will be published on Thursday, and February existing home sales data will be issued on Friday. Winter weather in February may have impacted both starts and existing home sales. Outside of the weekly reports and, obviously, the Fed meeting, there is really not much else on the economic calendar.

So what will move the markets next week? Sentiment. Daily fluctuations should continue, dependant on the news of the day and how the overseas markets fare. Traders still need to be willing to jump between going long and short. Investors will need to use prudence, but buying opportunities do exist.

It’s worth noting that despite Tuesday’s drop, one-fourth of the companies within the S&P 500 index are trading within 5% of their 52-week highs. (14 closed Thursday at 52-week highs.) In other words, underlying bullish sentiment still remains. Part of the reason is that analysts continue to forecast the average company to grow earnings at a double-digit pace this year. M&A activity and stock buyback programs are also playing a role. Finally, the economy is still expected to grow. Yes, the problems in the subprime market are a concern, but so far, risk-aversion has yet to become the norm.

Have a happy St. Patrick’s Day and may your NCAA brackets stay intact throughout the weekend. Go Jayhawks!

Companies That Could Issue Positive Earnings Surprises During the Week of Mar 19 - 23
Several food companies have surprised to the upside and General Mills (GIS) could be next. One of the 17 covering analysts raised his fiscal third-quarter estimate in the past week. The effect was to push the consensus estimate up by a penny to 70 cents per share. The Most Recent Consensus is more bullish at 73 cents per share. GIS has topped expectations for nine consecutive quarters. General Mills is scheduled to report on Thursday, Mar 22, before the start of trading.

Companies That Could Issue Negative Earnings Surprises During the Week of Mar 19 - 23
New York & Company (NWY) warned in January that fourth-quarter profits would be at the lower end of the 37- to 46-cent range it had previously forecast. Over the past few weeks, analysts have revised their projections causing the consensus estimate to fall by a penny to 39 cents per share. The Most Recent Consensus is more bearish at 38 cents per share. NWY has missed expectations twice and topped expectations twice in the past four quarters. New York & Company is scheduled to report on Thursday, Mar 22, before the start of trading.