January 22, 2014 / 7:31 PM / 4 years ago

What to Watch in The Day Ahead; Thursday, Jan. 23

Microsoft is expected to report higher second-quarter sales, but an 8 percent dip in profit as Windows 8, the Surface tablet and the new Xbox console had an unspectacular holiday shopping season. Investors will hope to hear more on the company’s meandering search for a new chief executive, which most had expected to be completed by now, after Steve Ballmer’s retirement plan was announced in August. The company will report results after market close. The number of Americans filing new claims for unemployment benefits likely held steady in the week ended Jan. 18, after falling for three consecutive weeks. The Labor Department is expected to report that initial claims held at a seasonally adjusted 326,000, the same as the prior week. (0830/1330) Data is expected to show that U.S. home re-sales rose in December after a drop in November. The National Association of Realtors is expected to announce that existing home sales rose 2 percent to an annual rate of 4.94 million units from the prior month’s 4.90 million units. (1000/1500) Investors are not expecting much good news when McDonald reports fourth-quarter results before the market opens. The fast-food giant’s sales are virtually stuck in neutral as recent menu introductions such as Mighty Wings have fallen flat and service times have slowed due to the broad array of offerings on its menu. Starbucks reports first-quarter results after market close. After two quarters of strong sales and traffic momentum, some analysts are concerned that the coffee chain’s new and improved pastries are slowing service because baristas are taking time to warm them up. Lockheed Martin is expected to report higher fourth-quarter earnings despite a drop in revenue. Lockheed’s biggest program, the F-35 fighter, appears to have survived the 2014 budget process, but company officials will face questions about the Littoral Combat Ship amid reports that the Pentagon could scale back total orders. Southwest Airlines is expected to report higher fourth-quarter results. The discount airline raised luggage fees at its AirTran unit and launched new fees tied to certain boarding positions at the gate to raise revenue. The carrier recently bought gates at New York’s LaGuardia Airport. Investors will be looking for commentary on its outlook. United Continental reports fourth-quarter earnings. Its stock has risen about 25 percent since the start of the year, and the company has already said December unit revenue rose. United, once the biggest airline in the world, also said capacity in the quarter is expected to rise almost 3 percent, and traffic is supposed to be higher too. U.S. Treasury Secretary Jack Lew, Trade Representative Michael Froman and Commerce Secretary Penney Pritzker are scheduled to participate in a panel discussion on the U.S. economic outlook at the World Economic Forum in Davos. When Union Pacific, the largest publicly traded U.S. railroad reports fourth-quarter results, all eyes will be on coal volume shipments and updates on any bad-weather related hits to the quarter. The company has already said it does not expect pricing gains this year to match those of 2013. In the third quarter, Union Pacific had talked about retailers being wary of placing orders. Updates are expected on whether order volumes were below expectations. Juniper Networks’ fourth-quarter results are likely to beat estimates, according to StarMine, helped by renewed growth in its core router/switch market following orders from Verizon. Juniper is also expected to strong first-quarter earnings as U.S. companies spend more on network equipment products. Programmable chipmaker Altera Corp’s fourth-quarter results are likely to miss analysts’ expectations, according to StarMine. Analysts say the company last year lagged rival Xilinx’s entry into the 28 nanometer chip market. Results could be affected by its biggest customer, technology distributor Arrow Electronics, which forecast mid-single digit sequential declines in its chip segment. Other companies that are also reporting quarterly results include Maxim Integrated Products, Informatica and Synaptics. Discover Financial’s fourth-quarter results are expected to ride on improving default rates and growth in consumer spending. Discount brokerage firm E*Trade Financial, still recovering from its life-threatening plunge into making mortgages through its bank, reports fourth-quarter results after market closes. Mexican annual inflation likely rose in early January at its fastest pace since early May due to an uptick in fuel prices and a hike in taxes on soft drinks and junk food, but the central bank has said it expects the spike to be temporary. A Reuters poll forecast that consumer prices rose 0.69 percent in the first half of the month. Core consumer prices, which exclude some volatile food and energy prices, were seen rising 0.64 percent. (0900/1400) Brazil’s annual inflation rate probably eased slightly in the month to mid-January, offering little relief to policymakers even after a series of interest rate hikes aimed at reining in consumer prices. Statistics agency IBGE will release its mid-month inflation report (0600/1100), just half an hour after the central bank publishes the minutes of its latest monetary policy meeting. (Compiled By Nikhil Kumar)

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