It’s FOMC week and in addition to that, some of the biggest stocks on the market are reporting their earnings this week. Needless to say, these next five days should be crazy and highly volatile.
While Monday is a very bullish day for the market seasonally, it might be rough going this time. Investors are expecting many of the earnings reports to underwhelm and thus the market may have trouble. Three of the biggest on Monday are GILD, TXN, and LVS.
For Gilead, sales are declining and the market seems to be ignoring any headwinds. Everyone in the market is bullish into GILD’s earnings, thinking that it can redeem itself from last quarter. The expected EPS is the same as last quarter’s, implying that exactly nothing has changed over the past 3 months. But the company’s Hep C and HIV med sales have fallen and are not exactly as great of revenue sources as Wall Street makes them sound (e.g., 8 weeks of use and you’re done – in contrast, other companies run their meds for six months). Sales in both Europe and Japan are down. There is also competition as a downward price pressure.
Tuesday and Wednesday:
Tuesday and Wednesday could see further declines if some of the big companies issue weaker forward guidance with their earnings. These include UA, TWTR, AAPL, MCD, CAT, FB, GRPN, WFM, and KO as well as lots of smaller companies.
The FOMC meeting concludes. Interest rates will probably not be hiked and this could cause a short rally in the market. If that happens, gold will likely fall. Earnings for Thursday include some more big names: AMZN, F, BIDU, GOOGL & GOOG, MA, EXPE.
We might have a lackluster end to the week. Investors could start reducing their positions on Friday as we move into August. August is one of the worst months to be long in the stock market and one of the only months in which the first day isn’t strongly bullish. Company earnings on Friday include: XOM, CVX, MRK, UPS, SAVE.