U.S. EQUITIES WEEK AHEAD: Retailers, Budget Talks, Sandy's Impact

Date : 11/09/2012 @ 4:19PM
Source : Dow Jones News
Stock : Staples, Inc. (delisted) (SPLS)
Quote : 10.25  0.0 (0.00%) @ 2:05AM
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U.S. EQUITIES WEEK AHEAD: Retailers, Budget Talks, Sandy's Impact

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   By Ben Fox Rubin 

Markets will likely pay close attention to scheduled talks next week in Washington on avoiding the fiscal cliff, and to how superstorm Sandy affected retail and manufacturing.

Additionally, though next week's slate of quarterly reports will be much lighter than in recent weeks, a handful of major names, especially from retail, should be coming out.

   Big Week for Retail Results 

Investors will get a glimpse of consumer sentiment going into the critical and fast-approaching holiday season with a bevy of quarterly results from retailers.

So far Macy's Inc. (M), Kohl's Corp. (KSS) and Nordstrom Inc. (JWN) posted improved third-quarter earnings. Next week will include reports from Wal-Mart Stores Inc. (WMT), Sears Holdings Corp. (SHLD), Abercrombie & Fitch Co. (ANF), Staples Inc. (SPLS), Home Depot Inc. (HD), Saks Inc. (SKS) and TJX Cos. (TJX), among others.

Looking forward, last year's holiday season went well for retailers, but Sandy's disruption of sales in the early part of the current quarter may force stores to play catch-up later.

   Two Big Tech Firms Reporting, Plus Viacom and Homebuilders 

Cisco Systems Inc. (CSCO), which has reported double-digit earnings growth for the past three quarters, is expected to post another rise in profit Tuesday, though a markedly smaller one amid the company's recently cautious words about European demand. Also, Dell Inc. (DELL) is expected to report another big earnings drop Thursday amid slumping personal computer sales.

Media conglomerate Viacom Inc. (VIA, VIAB) has struggled to turn around its Nickelodeon children's network, though the market expects it to post higher income in its upcoming quarterly report.

Meanwhile, homebuilders Beazer Homes USA Inc. (BZH) and D.R. Horton Inc. (DHI) will give investors a read on the strength of the housing market, where improvements in the long-battered industry triggered a recent rally of homebuilder stocks.

    Fiscal Cliff Talks Expected to Start 

President Obama on Friday invited congressional leaders to the White House next week to begin talks to avoid the so-called fiscal cliff, but addressed tension between the political parties on taxes by saying any compromise would have to include higher taxes levied on wealthier Americans.

Mr. Obama's position on taxes is at odds with House Speaker John Boehner (R., Ohio), the top Republican leader in Washington, who earlier Friday underscored that Republicans won't agree to higher income-tax rates as part of a deal reached with Democrats.

Without congressional action, federal income taxes will rise at the end of the year, as will rates levied on capital gains, dividends and estates. Last year's deficit law also requires $110 billion in cuts to defense and other domestic spending.

Republicans in 2011 used a needed debt-ceiling increase as leverage in deficit negotiations that led to the budget law setting up part of the "fiscal cliff," while the expiration of Bush era tax cuts at the end of 2012 form the other portion.

   Superstorm Seen Affecting Data 

With many households and businesses still in recovery, U.S. data releases in the coming week are expected to start reflecting some of the economic impact caused by Sandy.

Economists say Wednesday's report on October retail sales will reflect some of those disruptions. A 0.1% drop is the median forecast among economists surveyed by Dow Jones Newswires. A slowdown in auto sales due to Sandy played a large part in the pullback, they say.

Factories in the Northeast were also effected. U.S. economists at Nomura Securities say Thursday's Empire State survey from the New York Federal Reserve will be among the first major reports to reflect those effects. Similarly, the Philadelphia Fed's regional survey is expected to get dragged down.

The weekly jobless claims report is also seen making up for the prior week's drop because of delayed filings in the wake of the storm.

On Wednesday, the Federal Reserve releases minutes from its October policy meeting, along with updated projections on the economy and inflation.

    Four IPOs Expected Next Week 

Wi-Fi technology company Ruckus Wireless Inc. is set to start trading next week. Also on deck are biopharmaceutical firm Radius Health Inc., independent exploration and production company Energy & Exploration Partners Inc. and wealth-management company Silvercrest Asset Management Group Inc.

   Solyndra Plant Sale Moving Forward 

Failed solar company Solyndra LLC will put its massive former plant on the auction block and will seek bankruptcy-court approval of the winning bidder.

In August, Solyndra lined up a leading bid of $90.3 million from Seagate Technology Inc. (STX) for the 411,618-square-foot facility, which sits on 30 acres in Fremont, Calif.

That means Seagate's offer will kick off the bidding at Wednesday's auction, which will only be held if any rival bids come in by Monday's deadline. The winning bidder will be submitted for a Wilmington, Del., bankruptcy judge's signature at a sale hearing Thursday.

--Jacqueline Palank, Cynthia Lin, Corey Boles and Siobhan Hughes contributed to this article.

Write to Ben Fox Rubin at ben.rubin@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

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