Catalysts? What catalysts? Anyone who wants a reason for the markets to move in one direction or another during the week of June 18 is going to be disappointed. Daily market fluctuations, both here and overseas, possible comments out of Fed officials and sentiment are all the market will have to rely on.
The list of scheduled events is small, few companies are providing guidance and people are taking summer vacations. Even the Stock Trader's Almanac offers nothing except to say that the week after June triple witching has been negative for the Dow during 14 out of the past 16 years.
To be fair, there are eight S&P 500 companies on deck as the second-quarter earnings preseason continues. The companies are Best Buy (NYSE:BBY), Circuit City (NYSE:CC), Carnival (NYSE:CCL), Darden Restaurants (NYSE:DRI), FedEx (NYSE:FDX), H&R Block (NYSE:HRB), Jabil Circuit (NYSE:JBL) and Morgan Stanley (NYSE:MS). None of these, however, should wield enough influence to do anything more than cause some potential intraday swings in the market.
The economic calendar won't add much excitement either. May housing starts will be published on Tuesday. Thursday brings the May Leading Economic Indicators and the Philadelphia Fed's June survey.
Given this backdrop and lack of catalysts, interest rates could continue to play a role. The Fed's next meeting is not until June 27-28 (a two-day meeting) and although the committee should leave interest rates unchanged, the bond markets remain weak on a technical basis. Higher interest rates are a problem for the housing market and for the capital markets since they make more expensive to complete corporate deals. This is why perhaps the best catalyst for the bulls would be a large, private equity takeover - a clear sign that interest rates haven't risen too much. Of course, predicting if and when this will happen is beyond the scope of my crystal ball.
Catalysts. To quote Stephen Colbert, that's the word.
Companies That Could Issue Positive Earnings Surprises during the Week of June 18 - June 22
Commercial Metals (NYSE:CMC) has had a mixed record when it comes to earnings performance. It has beat expectations and missed expectations twice over the past four quarters. A recent improvement, albeit small, in the consensus estimate suggests CMC might just report bullish fiscal third-quarter reports. A revision by one brokerage analyst pushed the quarterly consensus estimate up by one cent to 78 cents per share. The Most Recent Consensus is at 79 cents per share. Commercial Metals is scheduled to report on Wednesday, June 20, before the start of trading.
Gerber Scientific (NYSE:GRB) recently preannounced results for its fiscal fourth quarter. The company, which makes graphics software for signs and apparel, expects to report revenues of $153 to $155 million and earnings of 22 to 26 cents per share. Both numbers were above the company's previous guidance. All of the covering brokerage analysts raised their projections in response, sending the consensus earnings estimate six cents higher to 23 cents per share. GRB has topped profit expectations for four consecutive quarters. Gerber Scientific is scheduled to report on Thursday, June 18.
Two brokerage analysts have raised their projections on Morgan Stanley (MS) within the past 30 days. The impact of these revisions has been to push the second-quarter earnings estimate up by a penny to $2 per share. The Most Recent Consensus is considerably more bullish at $2.09 per share. The investment banking and brokerage firm has topped expectations during each the past four quarters by an average margin of 40 cents per share. Morgan Stanley is scheduled to report on Wednesday, June 20, before the start of trading.
Companies That Could Issue Negative Earnings Surprises during the Week of June 18 - June 22
About one quarter of the covering brokerage analysts have cut their forecasts for Best Buy's (BBY) fiscal first quarter. The downward revisions may reflect concerns about weaker sales of LCD televisions and higher gasoline prices. The consensus earnings estimate of 50 cents per share is a penny less than 30 days ago and two cents below the average forecast of 60 days ago. BBY has missed expectations once during the past four quarters. Best Buy is scheduled to report on Tuesday, June 19, before the start of trading.