Day Ahead: Top 3 Things to Watch
Investing.com - Here’s a preview of the top 3 things that could rock markets tomorrow.
1. Home Depot Offers Window into Housing
Dow component Home Depot (NYSE:HD) will report earnings before the bell tomorrow, giving investors insight into the health of the housing market, as well as that of the company.
Wall Street is looking for fiscal second-quarter earnings of $2.84 per share on sales of about $30 billion.
While the U.S. economy is humming along well, there is concern about headwinds in housing. New home sales fell sharply in June, and sales of existing homes were also down. Homebuilders are struggling with the rising cost of building materials and shortages of land and workers, which is limiting new construction.
Any weakness in the home improvement retailer’s numbers could exacerbate these worries.
Home Depot investors will likely be focused on online sales, as the company is yet another major retailer that has to fend off competition from Amazon (NASDAQ:AMZN).
Online traffic grew 20% in the fiscal first quarter, the company said in its earnings call. About 46% of all online orders were picked up in store during that period.
2. Turkey Crisis Highlights Dollar Strength
Currency markets will be closely watched again tomorrow. The stock market is undecided, unsurprisingly, about how much impact a plunging Turkish economy and currency will really have on U.S. public companies. But investors will be keeping an eye on how much the dollar is rising across the board.
Increasing strength in the greenback could cause worries about the earnings of companies with lots of international business, which are already in the crosshairs due to trade battle concerns.
Today, the U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, was around 96.40. And there is more room for further upside, according to Oppenheimer.
"The key action last week was the US dollar’s index breakout above 95 resistance, in our view. This breakout completed a year-long bottoming formation and confirmed a reversal of dollar index's 2017 downtrend, by our analysis. We see 98 as the dollar index's next likely stopping point," Oppenheimer said in a note to clients.
The wild card is whether President Donald Trump will turn tweets into actions in his preference for a weaker dollar to cut the trade deficit.
Last week, J.P. Morgan said it was not ruling out the possibility that the U.S. would sell dollars to reach its trade goals.
3. Import and Export Prices Lead Economic Calendar
The economic calendar is fairly light tomorrow, with the highlight being import and export prices.
The import price index is expected to have risen 0.1% in July, compared with June, and the export price index expected up 0.2%.
Year on year, import prices were expected to be up 4.6% and export prices up 4.2% for July.
The data arrive at 8:30 AM ET (12:30 GMT).
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