What the Market Wants: Key Week for the Quarter

January 27, 2014 at 17:57 PM EST

Courtesy of David Brown, Sabrient Systems and Gradient Analytics This week could be very telling in what to expect from the markets in the first quarter and the rest of 2014 as a number of important companies report Q4 and 2013 year-end earnings. Today brought in some stock moving releases from Caterpillar Inc. (CAT), Apple Inc. (AAPL), Seagate Technology (STX). CAT reported better-than-expected earnings before the market opened along with a $10 billion buyback program. AAPL reported after the close, but it did not impress with lagging sales and outlook targets. Despite assurances from AAPL executives who said they were pleased with the results, AAPL was down sharply in the aftermarket. Revenues were a bit ahead of expectations while earnings were well above consensus estimates of $14.50. Cash and cash equivalents totaled a record $159 billion. So why are the shares selling off? iPhone sales were very disappointing to many. Coupled with Android’s reported growing dominance in new phone sales and stronger sales from Windows phones, the lowered guidance for the iPhone was just too much for the market to accept. A tough call in our opinion, but it’s certainly not great news. STX revenues were in line but earnings missed by $0.07, about 5% below expectations. That’s probably enough to warrant the 7% drop in the aftermarket considering the low valuation placed on STX shares. STX guidance was to meet expectations for the year. There were numerous other earnings releases with more beating than missing. The other big news for this week is the plethora of economic releases combined with the Fed’s two-day meeting. New Home Sales were short of expectations today, but the week will bring Building Permits reports tomorrow along with the Case-Schiller Home Index pricing report. And on Friday, we will get the Pending Home Sales report. The first major builder to report, NVR, Inc. (NVR), beat earnings handily and rose in the aftermarket—the homebuilding industry will likely be based on the totality of this week’s building reports as the week wraps up. The market will have much more to digest as tomorrow brings chain stores sales as well as the important Durable Goods and the Consumer Confidence reports. The Fed will release its target rate on Wednesday and any other information it chooses. On Thursday, we get our first look at Q4 GDP and the weekly Jobless Claims number. Given the reception…

Courtesy of David Brown, Sabrient Systems and Gradient Analytics

This week could be very telling in what to expect from the markets in the first quarter and the rest of 2014 as a number of important companies report Q4 and 2013 year-end earnings. Today brought in some stock moving releases from Caterpillar Inc. (CAT), Apple Inc. (AAPL), Seagate Technology (STX).

CAT reported better-than-expected earnings before the market opened along with a $10 billion buyback program.

AAPL reported after the close, but it did not impress with lagging sales and outlook targets. Despite assurances from AAPL executives who said they were pleased with the results, AAPL was down sharply in the aftermarket. Revenues were a bit ahead of expectations while earnings were well above consensus estimates of $14.50. Cash and cash equivalents totaled a record $159 billion. So why are the shares selling off? iPhone sales were very disappointing to many. Coupled with Android’s reported growing dominance in new phone sales and stronger sales from Windows phones, the lowered guidance for the iPhone was just too much for the market to accept. A tough call in our opinion, but it’s certainly not great news.

STX revenues were in line but earnings missed by $0.07, about 5% below expectations. That’s probably enough to warrant the 7% drop in the aftermarket considering the low valuation placed on STX shares. STX guidance was to meet expectations for the year.

There were numerous other earnings releases with more beating than missing.

The other big news for this week is the plethora of economic releases combined with the Fed’s two-day meeting. New Home Sales were short of expectations today, but the week will bring Building Permits reports tomorrow along with the Case-Schiller Home Index pricing report. And on Friday, we will get the Pending Home Sales report.

The first major builder to report, NVR, Inc. (NVR), beat earnings handily and rose in the aftermarket—the homebuilding industry will likely be based on the totality of this week’s building reports as the week wraps up.

The market will have much more to digest as tomorrow brings chain stores sales as well as the important Durable Goods and the Consumer Confidence reports. The Fed will release its target rate on Wednesday and any other information it chooses. On Thursday, we get our first look at Q4 GDP and the weekly Jobless Claims number.

Given the reception…