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WEEK AHEAD
Markets next week will be dominated by earnings, as big oil, healthcare and several notable
social media names lead the pack in what has so far been a middling earnings season, save for
some giants that have far exceeded expectations. Facebook, Exxon Mobil and Pfizer are all on the
docket. The market will also gravitate to the Federal Reserve's two-day meeting, the last before
September, which still looms as the first possibility for an interest-rate increase from the
Fed.
Facebook Inc is expected to grow revenue, excluding the impact of a strong dollar, according to
Wall Street analysts. Analysts expect the company's ongoing traction with various segments of
advertisers to help Facebook capturing a growing share of digital advertising budgets. When it
posts its second-quarter results on Wednesday, investors will keep a close watch on costs and
whether the company can keep up growth in monthly active users. Twitter Inc, which has been
struggling with slowing user growth, is expected to report second-quarter revenue on Tuesday,
below analysts' expectations, according to Thomson Reuters StarMine. Investors will look for
commentary on the progress in the direct response ads. They will also be on the lookout for
updates on the ongoing CEO search and the impact of a strong dollar. On Thursday, professional
social network LinkedIn Corp is expected to report second-quarter revenue slightly above average
analyst estimate, according to Thomson Reuters StarMine. Investors will keep a close watch on
the company's hiring business, in which revenue growth slowed to 36 percent in the first
quarter.
Exxon Mobil Corp, the world's biggest listed oil company, and its U.S. peer, Chevron Corp, are
scheduled to post second-quarter earnings on Friday. The world's top oil companies are set to
report yet another sharp drop in quarterly profits that could force more spending cuts due to a
dim outlook for oil prices.
Procter & Gamble Co and Colgate-Palmolive Co, the two U.S. personal care products companies with
big operations outside the United States, have been working to reduce the impact of a stronger
dollar on sales. While Colgate has raised prices in emerging markets, P&G is setting up
manufacturing plants there to localize supply chain activities. When Colgate reports its
second-quarter results and P&G its fourth quarter on Thursday, they are expected to beat
analysts' estimates on revenue, but miss on profit, according to Thomson Reuters StarMine.
Investors will be keen on any forecast updates and changes in strategy.
Thursday's data will show the U.S. economy is likely to have expanded at a much faster pace in
the second quarter. The gross domestic product is projected to have risen at a 2.6 percent
annual rate in the April-June quarter, compared to a contraction of 0.2 percent annual rate in
the January-March quarter. Separately, the Labor Department issues Employment Cost Index on
Friday. On the same day, the University of Michigan's final July reading on the overall index on
consumer sentiment is expected to come in at 94.0, a bit higher from a preliminary reading of
93.3. On Tuesday, financial firm Markit will release its preliminary reading of Purchasing
Managers Index for the services sector, which is expected to increase to 55.0 from 54.8 in June.
Pending Home Sales Index on Wednesday forecast to have risen 1.0 percent, compared to June's 0.9
percent increase.
Mastercard Inc is scheduled to post second-quarter results on Wednesday. A strong dollar is
expected to hurt the world's No.2 debit and credit card company, which gets 60 percent of its
payment volumes from outside the United States. About 10 percent of transactions made using the
company's plastic are on gasoline, according to analysts, and the low oil prices remain a drag
on Mastercard's earnings. Arch rival Visa is in talks to buy Visa Europe, which could mean a
more powerful threat in Europe, where Mastercard has a strong presence. The company is expected
to report second-quarter earnings in line with analysts' expectations, according to Thomson
Reuters StarMine.
On Tuesday, Merck & Co, the No. 2 U.S. drugmaker, is expected to report lower sales for the
second quarter, hurt by the stronger dollar and divestiture of its consumer care business. On
the same day, Pfizer Inc, which captures 60 percent of its revenue from abroad, is expected to
report lower second-quarter earnings as the stronger dollar hurts sales outside the United
States.
Amgen Inc is expected to report higher second-quarter sales and profit and may revise its
full-year forecasts on Thursday. Investors will be looking for details on the company's plans
for the launch of its just approved injectable cholesterol treatment in Europe, as well as its
expectations for likely U.S. approval and launch in the coming weeks. Biotechnology company
Vertex Pharmaceuticals Inc is expected to report lower-than-expected second-quarter earnings,
according to Thomson Reuters StarMine. Vertex was the first to develop a drug to treat the
underlying cause of a rare lung scarring disorder called cystic fibrosis (CF). On Wednesday,
investors will be looking to see how well the company is faring following the approval of
Vertex's latest CF drug, which allows the drugmaker to address a population of 8,500 patients,
up from 2,000.
Anthem Inc, which agreed to buy smaller rival Cigna recently, announces second-quarter earnings
on Wednesday. It is expected to report a higher profit, but all ears will be on any signs that
medical costs are a problem and any further commentary on its $54-billion deal for Cigna. Cigna
Corp reports a second-quarter profit on Thursday that is expected to be higher. On Wednesday,
Humana Inc, which has recently agreed to be bought by Aetna, posts its second-quarter earnings.
The company warned of its weaker outlook for 2015 already due to higher medical costs in
Medicare Advantage customers, and analysts have lowered their expectations for the quarter. On
Tuesday, health insurer Centene Corp is likely to report a better-than-expected second-quarter
profit, according to Thomson Reuters StarMine.
On Tuesday, chemicals company DuPont Co is expected to report a lower second-quarter profit,
hurt by a fall in agriculture earnings and a stronger dollar. DuPont derives about 60 percent of
its sales from outside North America. The company in May defeated a campaign by Trian to land
seats on DuPont's board, delivering a landmark setback to one of the most influential activist
investor firms. The company has moved its focus to its agri business, but seed sales have been
weighed down by a switch to soybean from corn in North America. Corn seed sales account for
about half of the sales from the agricultural products unit, the company's largest.
Ford Motor Co is scheduled to post second-quarter earnings on Tuesday. Recently, Ford had
announced that it is looking to a raft of new sedan and SUV launches in China later this year to
regain momentum in the world's largest auto market, after its sales barely grew in the first
half of 2015.
Canadian plane and train manufacturer Bombardier Inc reports its financial results for the
second quarter on Thursday. Analysts and investors may be looking for news on the Global
7000/8000, its newest business jets, which are scheduled to go into service in 2016 and 2017
respectively. Separately, Textron Inc, the maker of Beechcraft and Cessna aircraft, announces
second-quarter results on Tuesday. The company is expected to benefit from burgeoning
international demand, especially in its commercial market.
Video game publisher Electronic Arts Inc reports first-quarter results on Thursday. The company
is expected to report a quarterly profit above estimates, according to Thomson Reuters StarMine.
EA is expected to benefit from its fast-growing digital business, which includes software
distributed through the Internet. Investors, analysts and gamers alike will be looking any
details on the company's biggest release of the year, "Star Wars Battlefront", which comes out
in mid-November before the new "Star Wars" movie.
Satellite-TV provider DirecTV is expected to report second-quarter earnings slightly below
analysts' average estimate, according to Thomson Reuters StarMine. When it reports on Thursday,
all eyes will be on AT&T's $48.5 billion merger with DirecTV that is expected to close soon as
U.S. telecom and antitrust regulators signaled a green light for the merger.
On Thursday, wireless chip maker Broadcom Corp is expected to report better-than-expected
second-quarter profit and revenue, according to Thomson Reuters StarMine. The company has been
benefiting from strong demand for Apple's iPhone 6 and Samsung Electronics' Galaxy S6. Investors
will look for details on whether the company's exit from the baseband chips business is creating
competitive disadvantage due to the lack of a 4G product.
On Thursday, cable provider Time Warner Cable Inc, which is being bought by Charter
Communications, is expected to report second-quarter revenue slightly below the average analyst
estimate, according to Thomson Reuters StarMine. Last quarter, the company added 30,000
residential video customers, its first increase since 2009 and well above analysts' average
estimate, indicating a turnaround for the company. Analysts are looking for any update on the
deal, future investments and guidance.
On Thursday, T-Mobile US Inc, the No. 4 U.S. wireless carrier, is expected to report
second-quarter revenue ahead of analysts' average estimate, according to Thomson Reuters
StarMine, helped by customer wins that are drawn to its low-cost plans. The company's profit,
however, is expected to take a hit, hurt by costs related to aggressive marketing campaign.
On Tuesday, specialty glass maker Corning Inc is expected to report second-quarter revenue below
analysts' expectations, according to StarMine data. Analysts expect display glass demand to be
hurt by weak sales of personal computers and lower TV sales due to instability in China, which
accounts for a quarter of global TV demand. Investors will look to see if adoption of 4K TV and
continued demand for Gorilla glass can make up for the weakness.
Microsoft Corp, the world's largest software company, releases Windows 10 on Wednesday. Windows
10 is the latest version of its venerable operating system which is fighting for relevance in a
new mobile-computing world dominated by Apple and Google.
U.S. pipeline company Williams Companies Inc, which is in the middle of a takeover battle with
Energy Transfer Equity LP, is expected to report a higher profit for the second quarter on
Wednesday. The focus with the quarter will be on Energy Transfer's offer. Energy Transfer said
this month it would take any steps necessary to acquire Williams, after the company rebuffed the
offer and said it was it was exploring strategic options.
Mondelez International Inc, the maker of Cadbury chocolate and Oreo cookies, is likely to report
second-quarter sales below analysts' estimates, according to Thomson Reuters StarMine. The
company has been grappling with volatility in markets such as Europe, where sales have fallen
for the last three quarters. Investors will look for updates on the company's discussion with
Wal-Mart to "revisit" the strategy change, market conditions in Europe and progress on the sale
of its French coffee brand, Carte Noir, when it reports on Thursday.
D.R. Horton Inc, the largest U.S. homebuilder, is expected to report higher revenue and profit
for the third quarter on Tuesday as it sold more homes at higher prices. Investors will be
looking out for an update on its full-year financial forecast.
The friendly pursuit by Canada's Potash Corp of Saskatchewan Inc of German rival K+S tops the
interest of investors and analysts in the fertilizer sector, and Potash CEO Jochen Tilk will be
asked about his next move toward a potential $8-billion deal when the company announces its
second-quarter results on Thursday.
On Thursday, CME Group Inc reports second-quarter earnings, weeks after closing its open-outcry
futures trading pits because of the shift of volume to computers.
Sirius XM Holdings Inc announces second-quarter results on Tuesday. The company is expected to
report robust customer wins for its satellite radio service through the year, helped by strong
U.S. auto sales. People who buy new cars fitted with Sirius receivers usually get free access
for a few months, but must pay a fee to continue the service. In April, the company raised its
revenue and subscriber addition forecast for the full year.
Akamai Technologies Inc, whose service helps speed up delivery of online content, is expected to
report second-quarter revenue and profit marginally above estimates, according to Thomson
Reuters StarMine. However, when it reports its results on Tuesday, the company's revenue is
expected to take a hit from a stronger dollar, as it rakes in about a quarter of its revenue
from outside the United States.
Western Digital Corp, the world's No. 1 hard-disk drive maker, on Wednesday is expected to
report fourth-quarter profit below estimates, according to Thomson Reuters StarMine, as the
company has been facing slower growth in its cloud business, and lower demand from its
enterprise customers.
On Wednesday, Hilton Worldwide Holdings Inc, the owner of Waldorf Astoria and Conrad brands of
hotels, is expected to report second-quarter revenue above analysts' estimates, according to
Thomson Reuters StarMine. With hotel occupancy in the United States reaching record heights,
analysts expect a spike in average room rates, boosting revenue. Starwood Hotels & Resorts
Worldwide Inc is expected to post second-quarter profit and revenue below estimates, according
to Thomson Reuters StarMine. Investors will be looking for updates on strategic and financial
alternatives announcement made last quarter, when it reports on Thursday.
On Thursday, U.S. refiner Marathon Petroleum Corp is expected to report a higher second-quarter
profit, helped by strong profit margins. Gasoline crack spreads - the difference between crude
oil and gasoline prices- have risen on weak crude prices and robust gasoline demand. Investors
will look for details on the company's expectations for the natural gas processing business. On
the same day, Valero Energy Corp is expected to report a rise in quarterly profit, helped by
robust gasoline demand and a steep fall in oil prices.
Royal Caribbean Cruises Ltd reports second-quarter earnings on Friday. The world's
second-largest cruise operator is expected to report quarterly profit and sales below analysts'
estimates, according to Thomson Reuters StarMine, hurt by higher fuel costs and a strong dollar.
Increased promotional and marketing spending is likely to negatively impact margins as well.
However, the company is likely to benefit from its partnership with online travel company Ctrip,
which could lead to an increase revenue from the Asia-Pacific.
Yelp Inc, the operator of consumer review website yelp.com, is expected to report a
second-quarter profit below the average analyst estimate, according to Thomson Reuters StarMine
data. When it reports on Tuesday, investors will be looking for an update whether changes to
Google's search algorithm have negatively affected Yelp's traffic.
On Tuesday, IAC/InterActive Corp, the owner of matchmaking services Tinder and Match.com, is set
to report a second-quarter profit above Wall Street expectations, according to Thomson Reuters
StarMine. IAC, which announced plans to list part of its profitable Match Group dating business,
is expected to benefit from growth in dating subscribers and revenue from its Vimeo video
service.
On Wednesday, Shutterfly Inc, the online photo-sharing company is expected to post a
second-quarter profit slightly above the average analyst estimate, according to Thomson Reuters
StarMine. Shutterfly is expected to benefit from a jump in the number of customers using its
service. On the same day, Canadian business software maker Open Text Corp is expected to report
a lower profit for the fourth quarter. The company said in May it anticipates a negative impact
from a strong dollar in the quarter.
Ally Financial Inc reports second-quarter earnings on Tuesday. The largest U.S. auto lender is
expected to report a quarterly profit, helped by higher U.S. auto loans originations. General
Motors replaced Ally with its current in-house financing arm, General Motors Financial, for
subsidized leases on Buick, GMC and Cadillac vehicles, beginning in February. Ally, which also
lost exclusive agreements over the past two years with Chrysler, has been working to increase
its market share among other brands such as Ford Motor and Nissan Motor. Ally also became the
preferred financing source for Mitsubishi Motors in the United States, replacing the Japanese
carmaker's captive finance company in April.
Cybersecurity firm FireEye Inc will report second-quarter results after the market closes on
Thursday. The company has benefited from governments and businesses ramping up spending to
protect their networks from increasingly sophisticated attacks. Investors will look for signs of
higher demand and updates on sales of its on-premise equipment.
Rockwell Automation Inc, which makes automation systems that help factories run smoothly, is
expected to post a higher profit for the third quarter on Wednesday, helped by lower costs.
However, revenue is expected to decline, hurt by a strong dollar.
The Western Union Co reports second-quarter earnings on Thursday. The world's largest
money-transfer company is expected to report a quarterly profit, helped by higher fees from its
money-transfer services. Western Union is expected to face stiff competition from digital
payment processor PayPal, spun off from eBay, after its acquisition of digital money transfer
company Xoom.
Goodyear Tire & Rubber Co announces second-quarter results on Wednesday. The largest U.S.
tiremaker has been cutting costs to shrug off effects of a 9 percent rise in the dollar in the
first three months of the year that reduced revenues at almost all U.S. companies with
international exposure. Investors will be looking for updates on how the currency is expected to
impact results in the rest of the year, given that the dollar fell 3 percent in the three months
ended June.
National-Oilwell Varco Inc posts second-quarter results on Tuesday. The largest U.S. oilfield
equipment maker is expected to report a lower quarterly profit as a steep decline in commodity
prices weighs on demand. National Oilwell has expressed interest in drilling assets being
marketed by Halliburton. Halliburton may put up other assets on the block to gain regulatory
compliance of its deal with Baker Hughes. Investors will want to know if National Oilwell can
snap up any of these assets.
On Friday, Imperial Oil Ltd, Canada's No.2 integrated oil producer and refiner, is expected to
report a fall in second-quarter profit, hurt by a fall in crude oil prices. The company has said
that it would maintain a cautious spending outlook in the months ahead. Investors will look for
any commentary on cost reductions. On Tuesday, Husky Energy Inc is expected to report a big drop
in quarterly profit due to an oil price slump. On the same day, Consol Energy Inc is likely post
a loss in the second quarter due to weak commodity prices. On Thursday, Cenovus Energy Inc is
expected to report sharply lower second-quarter profit. The company has said it plans to use the
proceeds for other growth projects. Investors will look for details on investments and
cost-cutting measures.
Willis Group Holdings Plc, the world's oldest insurance broker, is expected to report a rise in
second-quarter earnings on Tuesday, but some analysts are wary of the impact of the significant
offshoring the company has quietly begun. Willis, like some of its rivals, has been moving to
grow its share of the lucrative benefits insurance market, and agreed last month to an $18
billion merger with human resources consultancy Towers Watson.
On Wednesday, USA Today publisher Gannett Co Inc is expected to report third-quarter revenue,
its first results after the spin-off of Tegna, in line with analysts' estimates, according to
Thomson Reuters StarMine. Analysts are looking for guidance for the new company and new
investments it plans to make.
On Tuesday, Ingersoll Rand Plc, the maker of heating and air conditioning systems, is expected
to report second-quarter revenue above estimates, according to Thomson Reuters StarMine. The
company's industrial business, which mainly receives revenue from outside the United States, has
been impacted by the strong dollar. Investors will be interested to see if the growth in
construction and industrial markets will boost profits.
Spirit Aerosystems Holdings Inc, the maker of fuselages for Boeing and Airbus, is expected to
benefit from rising demand for fuel-efficient aircraft and commercial planes. Investors will
look for comments from Spirit Aero on Boeing's deferred costs on its 787 program, when it
announces second-quarter earnings on Wednesday.
On Tuesday, solar panel maker SunPower Corp is expected to report a much higher second-quarter
profit, helped by stronger demand from utilities and lower costs. The focus this quarter will be
on the company's forecast.
Friday's data will show the Canadian gross domestic product is likely to remain unchanged in May
after an unexpected contraction in April. Separately, June producer prices are expected to have
increased by 0.5 percent from the previous month.
ON MONDAY, JULY 27
The U.S. Commerce Department releases data for non-defense capital goods orders, excluding
aircraft. A closely watched proxy for business spending plans is expected to have risen 0.4
percent in June.
Restaurant Brands International Inc, the company formed out of Burger King's takeover of Tim
Hortons, is expected to report a higher second-quarter profit, helped by higher sales from its
new and popular menu items. The company had launched dark roast coffee and crispy chicken club
sandwich at Tim Hortons stores and spicy BLT whopper sandwich at Burger King. Investors will
look for comments on the company's expansion plans and its efforts to lure in more customers.
The head of Toyota's Scion brand, Doug Murtha, will discuss the Japanese automaker's future
plans for the youth brand, which has had a spotty performance due to lack of product. The
company in the past has weighed repositioning Scion as a line of premium small cars or adding a
crossover or four-door sedan to the lineup.