What are the stocks to buy
Exxon Mobil will report earnings later this week. The energy sector is being blamed for dragging on S&P 500’s second-quarter earnings performance.
There will be plenty to grab investors’ attention starting Monday in a jam-packed week. Beyond the closely watched two-day Federal Open Market Committee meeting, set to kick off Tuesday, there will be a plethora of quarterly results.
More than 150 companies are on deck, including tech names like Facebook Inc. FB, -0.06% and Twitter Inc. TWTR, -1.51% as well as Ford Motor Co. and DuPont.
However, earnings from energy behemoths Exxon Mobil Corp. XOM, -2.01% and Chevron Corp. CVX, -1.25% may be what traders fixate on.
That is because quarterly results for energy companies have underpinned overall stock performance and so far that performance has left stock investors sorely wanting. Any earnings boost that investors had been hoping for from energy companies, or stocks more broadly, hasn’t materialized.
“The energy sector is reporting the largest year-over-year decline in earnings and revenues of all 10 sectors.” John Butters, senior earnings analyst at FactSet
That weakness falls squarely on the shoulders of the energy sector, which has underperformed all 10 sectors in the S&P 500, so far.
“The energy sector is reporting the largest year-over-year decline in earnings and revenues of all 10 sectors,” said John Butters, senior earnings analyst at FactSet, in a weekly report.
“This sector is also the largest contributor to the year-over-year decline in both earnings and revenues for the S&P 500 as a whole,” he said.
Earnings among energy companies are down 54.4% while revenue fell 38.2%, according to Butters. With 187 S&P 500 companies having reported second-quarter results, blended earnings, which combine actual results with projected estimates, are 2.2% lower. Blended revenues are
4% weaker. It is the first time since the third quarter of 2012 that earnings have fallen year-over-year, Butters said.
Also on deck to release quarterly results the week of July 27 are ConocoPhillips COP, -1.41% Valero Energy Corp. VLO, -1.44% and Phillips 66 PSX, -3.30%
All three indexes closed lower last week with the Dow Jones Industrial Average DJIA, -0.79% posting a weekly loss of 2.9% while the S&P 500 index SPX, -1.01% shedding 2.2%. The tech-laden Nasdaq Composite Index COMP, -0.43% also fell 2.3%.
Meanwhile, investors are likely to closely monitor the FOMC for clues on whether the Fed will raise interest rates in September as widely anticipated. The Fed will release a statement on Wednesday after the FOMC concludes its confab.
The Fed may leave itself some wiggle room in its statement but “continue to send a message that September is still on the table,” said Mike O’Rourke, chief market strategist at JonesTrading.
On the whole, there are not many positive catalysts to support the market next week, according to O’Rourke. “Challenging earnings, tied in with the Fed, could lead to more selling pressure,” he said.
Data to watch
- A report on durable-goods orders is due Monday at 8:30 a.m. Eastern Time.
- On Tuesday, the Case-Shiller home-price index, due at 9 a.m. Eastern, and a reading of consumer confidence, set for 10 a.m. Eastern will be released.
- Pending-home sales s are expected on Wednesday at 10 a.m. Eastern.
- Thursday will see weekly jobless claims and an estimate for second-quarter gross-domestic product, both set for 8:30 a.m. Eastern.
- Capping the week on Friday is the Chicago purchasing-managers index at 9:45 a.m. and a reading of consumer sentiment at 10 a.m.