The Week Ahead on Wall Street

Economic Data

It’s a relatively light stretch in terms of blockbuster economic releases. There are none scheduled today, but tomorrow gets the week started with the Chicago Fed National Activity Index for June. The monthly gauge is designed to measure overall economic activity and inflation trends and came in at 2.61 in May. This reading was up from -17.89 in April, representing positive growth.

On Wednesday, existing home sales for June are published. In May, existing home sales fell over 26% from 2019 levels, which was the largest annual decline since 1982. For context, in 1982 interest rates were hovering around 18%. Despite the drop, home prices were 2.3% higher than a year ago. The weekly MBA Mortgage Applications Index and EIA Crude Oil Inventories figures are also due.

On Thursday, investors will tune-in to the United States’ most closely watched weekly report: initial jobless claims. Last week the report showed that another 1.3 million Americans filed for unemployment benefits. This is the 17th straight week filings have topped 1 million. The consistently high readings week-over-week have become a stumbling block for any nascent market rally as Wall Street realizes the labor market recovery has a long way to go.

On Friday, new home sales for June are published. In May, new home sales surged by 16.6% on a monthly basis and 12.7% on an annual basis. May was the first month buyers in a lot of states could slowly venture out, and there was a spike in demand for new houses. July flash readings of service and manufacturing data are also published today.

Earnings to Keep an Eye On

International Business Machines Corp., otherwise known as IBM (IBM), is scheduled to report its latest results today. The multinational technology company hopes to highlight the gains it made in cloud-computing, analytics, AI, and cognitive technologies over the second quarter. Its Red Hat acquisition will be of particular interest as investors try to model in synergies from the purchase.

Keep an eye out for growth in security and health verticals too. Halliburton Co (HAL), Equity LifeStyle Properties Inc (ELS), and Logitech International SA (LOGI) are also scheduled to report.

Coca-Cola Co (KO) reports before the bell tomorrow. Last week, PepsiCo (PEP) shared its progress over the prior quarter, highlighting that the beverage sales fell, but its snack business stayed strong. Coca-Cola is more of a beverage-centric business, which means it could be hit harder by the closure of movie theaters, restaurants, and slower traffic at gas stations. The company may warn investors about top and bottom line slumps heading into the second half of the year. Novartis AG (NVS), Texas Instruments Inc (TXN), Philip Morris International Inc (PM), and Lockheed Martin Corp (LMT) are also scheduled to report.

Tesla Inc (TSLA) reports after markets close on Wednesday. One thing to watch will be the electric vehicle maker’s bottom line. If Elon Musk can drive his company toward a second quarter profit under GAAP accounting principles, Tesla’s stock has a good chance of being added to the S&P 500 index. Analysts who are bullish on the company believe this will lead to more buying and gains for the stock. There are concerns, however, that retail investors have been driving shares too high, so this could be a wild day for the high-profile firm. Microsoft Corp (MSFT), Thermo Fisher Scientific Inc (TMO), and CSX Corp (CSX) are also scheduled to report.

Intel Corp (INTC) reports after the bell on Thursday. Recently, Apple (AAPL) announced it will be dropping Intel processors from Macs later this year in order to transition to in-house chips. Although this may be a near term headwind for Intel, the chip maker’s Mac business is small, relatively speaking. According to Timothy Arcuri, an analyst at UBS, Apple drives only 3% of Intel’s annual revenue. Although there have been concerns about the personal computer space in terms of growth prospects, PC sales have surged recently due to homebound students and workers. If this trend continues, it could be good for Intel. AT&T Inc (T), Danaher Corp (DHR), T-Mobile US Inc (TMUS), and Union Pacific Corp (UNP) are also scheduled to report.

Verizon Communications Inc (VZ) reports before the bell on Friday. The telecommunications conglomerate is an example of a strong company that looks ready to weather choppy waters brought on by an uncertain landscape as a result of the pandemic. In April, the company acquired video-conferencing company, BlueJeans, for an estimated $400 million—so investors will be looking to see what Verizon has in store for the service. The company is also collaborating with IBM on 5G solutions. Verizon has hiked their dividend payout for 13 straight years, so between their video-conferencing ambitions, 5G plans, and dividend prospects the company looks well positioned for the future. Nextera Energy Inc (NEE), Honeywell International Inc (HON), and American Express Co (AXP) are also scheduled to report.

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