Wall Street shut Monday ahead of big earnings week as Google, Apple, Microsoft report
With U.S. markets shut Monday for the Martin Luther King Jr. holiday, Tuesday will start the trading week off with a bang, with earnings slated to come out from tech heavyweights Google (NASDAQ:GOOG), IBM (NYSE:IBM) and Texas Instruments (NASDAQ:TXN).
Last week, the consumer tech company lost 3.9% off of its share price, as reports emerged that it slashed orders for components of its iPhone 5, suggesting weaker-than-expected demand for the device.
Analysts polled by FactSet currently expect Apple to post fiscal first-quarter earnings of $13.45 a share, down from $13.87 a year ago. Revenue, however, is expected to rise to $54.92 billion from $46.33 billion in the year-earlier period.
If the company surprises the market with better-than-expected results, its shares stand to gain significantly. If, however, it posts a loss as anticipated, it would be the first time since the second quarter of 2003, according to FactSet.
Its first quarter results will be the first full three month period to include sales of the iPhone 5, which was launched in September. Shipments are expected to total around 48 million, but investors are concerned the California-based company will not meet this, especially given the reports last week. It finished lower by over 0.5% on Friday, at exactly the $500 per share mark.
Traders will also be eager to get the scoop from Microsoft with the sales of its latest product - the Windows 8 operating system - which was introduced in October.
Info tech sector earnings are expected to drop 2.9% for the quarter. According to FactSet, of the 54 companies in the S&P 500 that have reported earnings so far, 65% have handed in profits above the average, while 69% beat on sales.
On Friday, the S&P 500 finished up by 5 points at 1,486 - its highest close since December 2007, ending the week with a gain of 1%. The Dow rallied 54 points, while the Nasdaq finished down slightly, weighed by quarterly results from Intel (NASDAQ:INTC).
Intel (NASDAQ:INTC) reported a quarterly profit of $0.48 per share, three cents above estimates, despite dropping sharply from a year before. But shares of the chipmaker lost over 6.3%, as it projected a bigger-than-expected increase in capital spending for this year, and issued a disappointing forecast for the first quarter. Intel said it would invest about $13 billion in equipment this year, as its core PC business continues to weaken.
But markets were supported as House Majority Leader Eric Cantor said Friday that the House will vote to authorize a three-month increase in the debt ceiling, to give Congress time to pass a budget. Though the news provided some optimism to markets, the extension of the debt limit still doesn't provide a long-term solution to the U.S. deficit.
Better-than-expected results from industrial conglomerate General Electric (NYSE:GE) also provided a lift, which was taken in against a preliminary reading on consumer sentiment that fell in January, and data that showed China's economy is picking up steam.
With markets closed today, investors will turn their attention to the inauguration of President Barack Obama. Economic data this week will see sales of existing homes in December on Tuesday, sales of new homes in December on Friday, with jobless claims and the PMI Manufacturing Index flash out on Thursday.
Back in Europe, stock markets moved modestly higher on Monday, following gains from their U.S. counterparts on Friday. Eurozone finance ministers were meeting for the first time this year on Monday, with traders speculating they could name a new chairman as soon as today.
European markets rose, with shares in Germany leading the region. The DAX was lately up 0.39% in early afternoon trade, while Britain's FTSE 100 gained 0.28% and France's CAC 40 advanced 0.26%.
In electronic trade, crude oil for February delivery gained 8 cents to $95.2 a barrel, while gold futures gained $2.20 to $1,689.20 an ounce.