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
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