By Week’s End, We Could Have A Different Market

A perfect storm caused by a government shutdown, a sovereign debt deadline and a long list of major earnings announcements could make this week especially critical for the markets.

Although earnings season officially kicked off last week, the real fireworks get going on Tuesday, the beginning of a 72-hour period when at least ten huge and very closely followed companies report. This week’s earnings announcements may well spill out just as market-moving hysteria over Congressional gridlock reaches fever pitch. Unless Congress announces acceptable solutions for reopening the government and paying its debts by Friday, share prices will almost certainly dive, regardless of earnings.

^SPX Chart

^SPX data by YCharts

Regardless, investors will dissect the data and comments from the giants for signals that expected economic growth late this year hasn’t been derailed by Congress or other factors. Tuesday’s reports include Intel (INTC), a $116 billion market cap company and the first major tech company to report, as well as Coca-Cola (KO), Citigroup (C) and Johnson & Johnson (JNJ), according to Bloomberg’s earnings calendar.

INTC Market Cap Chart

INTC Market Cap data by YCharts

On Wednesday, prominent companies scheduled to report include International Business Machines (IBM), PepsiCo (PEP), U.S. Bancorp (USB), Bank of America (BAC), American Express (AXP) and Abbott Laboratories (ABT). Thursday’s reports include Google (GOOG), Verizon (VZ) and Capital One Financial (COF).

IBM Market Cap Chart

IBM Market Cap data by YCharts

USB Market Cap Chart

USB Market Cap data by YCharts

Also reporting on Thursday are Chipotle Mexican Grill (CMG), eBay (EBAY) and Intuitive Surgical (ISRG), which are smaller but closely followed because of huge investment returns they have provided.

CMG Chart

CMG data by YCharts

As big early reporters, these companies give investors information that can be applied in investment research broadly across the market. Multinationals Coca-Cola, Johnson & Johnson, PepsiCo and IBM, for example, will detail which parts of the world they expect to see the best sales in coming months. It’s useful information for investors making asset allocation decisions and reallocating assets toward more international exposure, as many are now.

The financial institution results will highlight strengths and weaknesses in the housing recovery. eBay will show us whether it’s making any gains against Amazon.com (AMZN), as well as provide hints about consumer sentiment generally. Finally, the CEOs of each of these companies will spend the day answering questions about what Congressional actions (and inactions) are doing to their businesses.

For anyone who has money in the markets, this is a particularly good week to pay attention.

Dee Gill, a senior contributing editor at YCharts, is a former foreign correspondent for AP-Dow Jones News in London, where she covered the U.K. equities market and economic indicators. She has written for The New York Times, The Wall Street Journal, The Economist and Time magazine. She can be reached at editor@ycharts.com. Read the RIABiz profile of YCharts. You can also request a demonstration of YCharts Platinum.

Read more articles about: Economic Watch  earnings season   

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