"... you might get some cheer this week, courtesy of Nike (NKE -0.44%) and Oracle (ORCL +0.62%). Both report quarterly results after the market close on Tuesday, and Wall Street is hoping for good things from both companies.
Enough to push the stock market out of its doldrums? Possibly in the short run because they will shine lights on a domestic economy that's at least steady. But the market needs help for the longer term -- from Europe and China in particular.
Next week is the last before two holiday-shortened weeks, the first for Christmas and then for New Years. While Nike and Oracle may offer good results and guidance, overall trading volume will be light over those two weeks, which can create volatile markets.
But the week before Christmas historically has been a good one for investors. Over the last 10 years, Bespoke Investment Group noted Friday, the Standard & Poor's 500 Index ($INX +0.32%) has finished higher on the week seven times.
Most investors are likely to think of the past week as a forgettable mess. For good reason: The Dow Jones industrials ($INDU -0.02%) fell 2.6%, with the S&P 500 dropping 2.8% and the Nasdaq Composite Index ($COMPX +0.56%) down 3.5%. The losses were the first for the major indexes after two straight weekly gains.
Commodities broke in a big way, with gold (-GC) falling 6.9% and crude oil (-CL) falling 5.9%. Wheat (-ZW +58.14%) is down 26.5%, and cotton is off 40.7%.
Commodity prices have been falling fairly steadily since spring. Crude oil peaked on April 29 and is up 2.8% for the year. Gold topped out at $1,891.90 an ounce on Aug. 22 and has seen a 33% gain for the year melt down to 12.4%. Silver (-SI +1.56%) and copper (-HG +1.96%) are off 4.1% and 25.1%, respectively for the year.
The declines are basically due to softening economies in Europe, thanks to its debt crisis, and in China, where there is increasing evidence that a real estate bubble has burst.
The Shanghai Composite Index, the benchmark Chinese stock market measure, is down 21% this year, with most of the decline coming Aug. 1.
The case for Nike and Oracle
So, why should investors see Nike and Oracle offering bullish signals? Consumers are still buying, and many corporations are still investing in information technology to become more efficient.
And, in Nike's case, the swoosh commands a lot of power in stores around the world. The Jordan 11 line of shoes is due out before Christmas, and the company should benefit from the build-ups to the 2012 Olympics in London and soccer's 2014 World Cup in Brazil.
Nike is expected to report 97 cents a share in earnings on revenue of $5.63 billion, up from 94 cents and revenue of $4.84 billion a year ago. So watch Nike's guidance, and watch Nike's order book, a good indicator of future business.
Oracle is expected to earn 57 cents a share on revenue of $9.2 billion, from 51 cents on revenue of $8.6 billion a year ago.
New software licenses are expected to grow 14%, a good sign. Hardware sales are likely to fall. And the company will probably discuss its interest in expanded its interests in cloud-computing.
Who else reports
Here are the other reports to watch for.
Monday: Red Hat (RHAT). Look for a discussion of cloud-computing as well.
Tuesday: ConAgra (CAG -0.39%), General Mills (GIS -0.60%) and payroll processor Paychex (PAYX +0.82%). If jobless claims are falling and payrolls are growing, Paychex should benefit. The key to ConAgra and General Mills will be their outlooks on commodity costs.
Wednesday: Bed Bath & Beyond (BBBY +0.08%), used-car dealer Carmax (KMX +1.03%), Herman Miller (MLHR +0.39%) and Steelcase (SCS +3.53%). Bed Bath & Beyond is the 11th best performer among Nasdaq-100 stocks this year. Bed Bath & Beyond is expected to report 88 cents a share, down from 93 cents ay ear ago. Its view of consumer confidence and its effect on guidance is important. Herman Miller and Steelcase offer a feel for whether there's growth coming in hiring. Both stocks dropped this summer and are only now beginning to recover a little.
Thursday: American Greetings (AM -0.90%). This is a company whose products are discretionary.
There are no big earnings reports in the week between Christmas and New Year's.
Existing home-sales, economy growth and durable goods orders
The most interesting report of the week will probably be the most depressing: the November existing-home sales report from the National Association of Realtors, due Wednesday.
The trade group is going to issue revised statistics on sales all the way back to 2007. That's likely to cut the reported sales by 10% to 15%. And what that will tell people is residential real estate has been even worse that we thought.
The reason for the revisions was loud calls for reexaming its data from CoreLogic and others, who said their data indicated a much weaker market than the NAR had thought. The organization redid a lot of its work and found that many sales were double counted.
Here's what else is due:
Housing starts and building permits for November, due Tuesday. These should some continuing improvement of a very weak part of the economy.
Gross Domestic Product for the third quarter, due Wednesday. Nomura sees a growth moving to an annualized 2.1%.
Jobless claims, due Thursday. Another week of sub-400,000 claims will mean good things for December's jobs report, due on Jan. 6.
Durable goods orders for November, due Friday. Look for a gain of 2.3% at least, due to 96 aircraft orders reported by Boeing (BA +0.57%), compared with just seven in October. December may be better.
Personal income for November, due Friday. Look for a small decline.
New-home sales, due Friday. This should show a gain, but the numbers are tricky. They count only contracts signed and not cancellations.
Here's what will come in the week of Dec. 26.
Dec. 27: the S&P/Case-Shiller Home Price Index and the Conference Board's December report on Consumer Confidence.
Dec. 29: Jobless claims from the Labor Department.
Dec. 30: The December Chicago Purchasing Managers Index, widely watched by the markets...."
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