A packed earnings calendar, a US Federal Reserve policy meeting and Fed Chairman Ben Bernanke’s news conference on the economic outlook are expected to give investors a lot to digest next week.
Encouraged by solid quarterly earnings reports and despite a warning on US sovereign debt, Wall Street’s main stock indexes surged to lofty heights in the Easter holiday-shortened week.
US financial markets were closed on Friday.
“Given the rough start we had Monday, you would never have guessed we’d end up on such a positive note,” Gina Martin of Wells Fargo Securities said.
Over the four days to Thursday, the Dow Jones Industrial Average gained 1.33 percent to finish at 12,505.99 points, its highest close since June 2008.
The tech-rich NASDAQ Composite added 2.01 percent at 2,820.16 points, while the broad-market S&P 500 index advanced 1.34 percent to 1,337.38 points.
The three indices began the week with a plunge of more than 1 percent on Monday after ratings agency Standard & Poor’s warned about US sovereign debt.
The warning meant the US had a one-in-three chance of losing its top “AAA” rating in the next two years.
Dan Greenhaus at Miller Tabak said the warning had been expected “eventually,” but when it happened people were caught off guard.
“It was relatively minor because it was not really anything new per se and the rest of the week was spent recouping those losses because earnings were increasingly better,” he said.
Earnings season got off to a mixed start last week, but this week’s wave of reports mostly were better than expected, reassuring investors.
The technology sector, a major part of the S&P 500, proved particularly adept at hurdling market forecasts, with computer chip maker Intel and gadget giant Apple posting soaring profits.
Investors appeared as happy with the encouraging tech earnings as they were relieved to see little impact on the books from the March 11 Japan earthquake and tsunami.
The upcoming week also will be packed with quarterly earnings. Among those, package delivery firm UPS, considered a barometer of economic activity, will report on Tuesday and software giant Microsoft on Thursday.
Eight of the Dow’s 30 blue-chip stocks are scheduled for quarterly reports.
In addition to earnings, the week is expected to be full of economic news.
“You’ve got all angles going full steam ahead — from the policy angle to the broad macro data angle to the earnings number. It could be pretty wild,” Martin said.
Indicators in the depressed housing market are due, with new-home sales tomorrow and housing prices on Tuesday.
A snapshot on consumer confidence also is due on Tuesday, while consumer income and spending data arrives on Friday.
The US government’s first estimate of first-quarter GDP — a measure of the country’s output — is scheduled for Thursday.
That “could cause the market to move because we got so optimistic about GDP and economists have marked down their forecasts pretty consistently for Q1 GDP for the last several weeks,” Martin said.
Investors also were on tenterhooks ahead of a two-day Fed policy-setting meeting that ends on Wednesday.
For the first time, a news conference has been organized following the US Federal Open Market Committee (FOMC) meeting.
According to the central bank, Bernanke is addressing reporters to “present the FOMC’s current economic projections and to provide additional context for the FOMC’s policy decision.”
“This is very unusual, very new, nobody knows what to expect,” Greenhaus said.
“It’s a big deal,” he added.
The Fed is widely expected to keep interest rates at ultra-low levels and to continue rolling out a US$600 billion asset purchasing program designed to support the economy’s weak recovery.
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