Investor Update for August 20, 2012
Seemingly in an instant, the entire mood of the marketplace has shifted. Whereas the summer started on an unsettlingly choppy note, over the past few weeks, this volatility seems to have vanished. Europe-related fears have taken a back seat and not even uncertainty out of Washington has been able to rattle investors. This air of tranquility was made evident early last week when major U.S. stock market averages experienced a handful of sessions that saw little to no movement at all. Encouragingly, when stocks eventually awoke from their lull, they managed to push higher. The equity markets would end the week in positive territory, marking a sixth straight week of gains.
Doubters have met this recent rally with plenty of skepticism. Still, it is evident the multi-year bull market has some gas left in the tank.
Compared to last week, the next few sessions are shaping up to be relatively quiet. Earnings season wrapped on Friday when Wal-Mart (WMT) stepped up to the earnings plate and on the surface, the economic calendar appears light. Nevertheless, there are still factors to keep an eye on. This market is still very-much headline driven. Therefore, a combination of flexibility, level-headedness, and patience are still of the utmost importance.
Big Picture: Last week, investors endured a persistent stream of economic data. With Industrial Production numbers, Retail Sales statistics, the monthly CPI report, and the NAHB Housing Market Index on tap, investors got a feel for the state of a wide variety of market segments. This week, the flurry of reports subsides considerably with only a handful of releases on tap. Existing and New Home Sales are two notable numbers to watch.
Though quiet, this is not to say big picture topics will be ignored. On the contrary, on Tuesday afternoon, all eyes will shift to the Federal Reserve which is slated to release the minutes from its latest FOMC meeting. The monetary authority has remained coy on the topic of new stimulus, but this has not prevented the public from questioning whether QE3 is right around the corner. Tuesday’s release should help shed more light on this issue.
Earnings: Earnings season came to a ceremonious end on Friday when discount retail giant, Wal-Mart stepped up to the plate. The busy period may be in the rearview, but a number of companies are still awaiting their time in the spotlight. This week, expect to hear from companies including Best Buy (BBY), Hewlett-Packard (HP), Salesforce.com (CRM), and Toll Brothers (TOL).
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