A bad earnings report from Caterpillar Inc. is weighing down the Dow Jones today. Now all eyes are turning to the FANGs' earnings due out this week.
The Dow Jones projected a small gain ahead of a busy week of earning reports. Firms including Facebook Inc. (NASDAQ: FB), Apple Inc. (NASDAQ: AAPL), and Amazon.com Inc. (NASDAQ: AMZN) will report in the coming days.
Optimism has been high ahead of tech earnings in recent quarters, but now warning signs are mounting, especially in China. We'll break down what to expect below, but be sure to sign up for the Money Morning Profit Alert to stay on top of this big earnings week.
Here are the numbers from Friday for the Dow, S&P 500, and Nasdaq:
On Monday, U.S. government agencies that have been shut down over the last five weeks will reopen. Last week, Congress and the White House reached a short-term deal to reopen the government and provide back pay to the more than 800,000 federal workers who were furloughed during the process. But keep in mind that this agreement is only temporary and another shutdown is possible in three weeks. In addition, a lot of investors will be flying blind as several economic reports have been delayed by the shutdown. This week, investors are looking for the January jobs report, fourth-quarter GDP updates, and a key report on personal income levels.
Caterpillar Inc. (NYSE: CAT) will lead another busy day of earnings reports. The industrial giant's stock plunged 6% after it fell short of Wall Street expectations. The firm said that economic weakness in China is largely responsible for the earnings miss.
Finally, pay close attention to the U.S. Federal Reserve this week. The central bank will host a two-day meeting to discuss the U.S. economy and expectations for interest rates in the year ahead. Fed Chair Jerome Powell will host a press conference Wednesday afternoon. The bigger news to monitor from the Fed is whether the central bank decides to slow down the pace of its reducing of the size of its securities portfolio.
Stocks to Watch Today: HOG, VALE, FB
Harley-Davidson Inc. (NYSE: HOG) is facing sharp sales declines and an aging demographic of customers. On Friday, UBS analyst Robin Farley said that a sharp generational divide between millennials and older Americans is bad news for Harley, which has seen its share price plunge by 32% over the last year. The company will report earnings Tuesday.
Shares of Vale SA (NYSE: VALE) are expected to continue their free fall on Monday. The mining giant is facing significant scrutiny in Brazil after a company dam burst and forced 24,000 people out of their homes. Dozens of people have died, and hundreds are missing. This is the second Vale damn to burst, and it could create unprecedented uncertainty for the company as liabilities mount. It is expected that this disaster could curb Brazil's appetite for mining and could cause its new president to abandon his plans for further deregulation in the space.
Facebook Inc. is making news ahead of its earnings report this week. The social media company got the attention of antitrust regulators thanks to its plans to merge its messaging services. The firm wants to integrate the infrastructure of its Instagram, Messenger, and WhatsApp platforms. Expect chatter about breaking up the company to continue to make the rounds while the public debate picks up. Advocates who want to break up Facebook have long suggested that WhatsApp or Instagram should be spun off. Facebook bought Instagram in 2012 for $1 billion and WhatsApp for $19 billion in 2014.
Look for earnings reports from AK Steel Holding Corp. (NYSE: AKS), J&J Snack Foods Corp. (NASDAQ: JJSF), Alliance Resource Partners LP (NASDAQ: ARLP), Graco Inc. (NYSE: GGG), Whirlpool Corp. (NYSE: WHR), Crane Co. (NYSE: CR), Park National Corp. (NYSE: PRK), AudioCodes Ltd. (NASDAQ: AUDC), and Brown & Brown Inc. (NYSE: BRO).
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.