What to Watch in the Day Ahead; Thursday, May 22

Wed May 21, 2014 2:31pm EDT

(The Day Ahead is an email and PDF publication that includes the day's major stories and events, analyses and other features. To receive The Day Ahead, Eikon users can register at . Thomson One users can register at RT/DAY/US. All times in ET/GMT) A weekly report on new claims for jobless benefits will likely show a rebound in the latest week's filings from the seven-year low hit the prior week. The U.S. Labor Department is expected to report that 310,000 new applicants filed for unemployment insurance, up from 297,000 the week before. (0830/1230) Also on the radar for the day is U.S. housing data, which is expected to show a pickup in sales in April (1000/1400) and Markit May flash purchasing managers' index, which likely will show slight gains in the U.S. services sector. (0945/1345) The National Association of Realtors is expected to report that existing home sales rose to a 4.68-million unit pace. Hewlett Packard is still trying to keep things on an even keel as personal computer demand crumbles and spending by corporations and government agencies on computing remains shaky. When HP reports results after the bell, Wall Street will expect to see a slight but discernible improvement in the company's efforts to arrest its revenue decline and protect margins, given Cisco's better-than-expected performance last quarter and IBM's somewhat positive outlook.

Royal Bank of Canada and Toronto-Dominion Bank are expected to report results for the second quarter. Analysts expect a profit of C$1.44 per share from Royal Bank of Canada and Toronto-Dominion is expected to report a profit of C$1.02 per share.

Gap Inc is scheduled to report first-quarter results and investors will be looking for signs of revival in apparel sales. The retailer, whose sales last month benefited from a warmer April, has estimated quarterly profit above Wall Street expectations. When electronics retailer Best Buy reports first-quarter results, investors expect an update on its turnaround efforts, which CEO Hubert Joly has spearheaded with success so far. The company has cut jobs, shut unprofitable stores and stripped away layers of management, leading to three straight quarters of profitable growth. Analysts expect further cost cuts and improved marketing initiatives to better compete with Amazon, and they hope Joly will throw more light on such efforts. According to StarMine, Best Buy is expected to beat both profit and sales estimates comfortably.

Struggling retailer Sears Holdings is expected to post a bigger first-quarter loss, despite its attempts to boost cash by selling assets. Sears has been posting declining sales since 2005, has closed about 300 stores since 2010 and recently said it was looking at selling its 51 percent stake in Sears Canada. Investors will be watching out for details of any new plans to raise cash as well as for its outlook for the year.

Chipmaker Marvell Technology is expected to report first-quarter results above the average analyst estimate after the bell, according to StarMine, helped by a pickup in its mobile business. GameStop's results are likely to be in line with estimates, according to StarMine data. The company is expanding its digital and mobile offerings, including sale of iOS and Android devices in some stores to counter sagging video game software sales and competition from new players in the arena, such as Wal-Mart. Demand for game software remains weak as consumers flock to games available on smartphones and tablets, but some analysts believe that the company will continue to be a dominant player despite the emergence of PC and mobile gaming platforms.

China's No.2 internet retailer JD.com is expected to raise up to $1.70 billion in the year's biggest U.S. initial public offering of a Chinese company so far. The company, which operates in the shadow of much bigger rival Alibaba, has seen investments from the Ontario Teachers' Pension Plan and Saudi billionaire Prince Alwaleed bin Talal's Kingdom Holding Co. Investors are expected to keep a keen eye on the IPO of JD.com for some clues ahead of Alibaba's monster offering later this year.

SunEdison Semiconductor's initial public offering is expected to raise about $108 million, valuing its semiconductor unit at up to $605.4 million. SunEdison, which plans to spin off its semiconductor unit to focus on its high-margin solar power business, plans to use the proceeds to build solar farms.

Canadian retail sales likely showed cooler growth in March, with Statistics Canada expected to report that retail sales climbed 0.3 percent in the month compared with 0.5 percent in April and were up 0.4 percent excluding autos, according to the median forecast in a Reuters survey. (0830/1230)

Mexican annual inflation data scheduled for release in the day is likely to show that it eased further in early May, backing expectations that policymakers will leave interest rates on hold this year at a record low to support a struggling economy. (0900/1300) (Compiled by Ayesha Sruti Ahmed in Bangalore)

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