Many stock market investors have been looking for an excuse to take some profits off the table after the 30% gains of 2013 -- and my, oh my, did the markets provide excuses in the past few days.
And the week ahead has so much potentially market-moving corporate, economic and political news that it’s hard to predict what might happen.
Over the last few days, the prospect of an economic slowdown in China, weakness in emerging market currencies, mixed U.S. company earnings and economic indicators, and the lingering concern about the Federal Reserve taking away liquidity, all combined to send the stock market tumbling.
The S&P 500 lost 2.6% for the week, its worst five-day stretch since June 2012.
The week ahead is a minefield of news and information that will take great skill to navigate.
Much could depend on whether the Fed’s policy makers, as most analysts expect, announce on Wednesday they will continue to reduce their monthly bond-buying stimulus measures by $10 billion a month.
This unconventional stimulus has helped prop up markets for a long time and helped keep interest rates extraordinarily low. The withdrawal symptoms among traders could be messy.
Throw in any continued contagion in emerging markets, earnings from many of America’s biggest companies including Apple, Google, Pfizer, Ford Motor, Caterpillar, Amazon.com, Yahoo and MasterCard, and a monster of a week for sensitive economic data, and it’s clear the week ahead could make or break quite a few investors.
The U.S. Treasury intends to sell a lot of debt in the coming week. According the Bloomberg data, the Treasury will attempt to auction at least $111 billion of notes and bonds in the next few days.
U.S. President Barack Obama will on Tuesday deliver his annual State of the Union address and he could call for an increase in the minimum wage – always a divisive subject -- and encourage spending on works projects to create jobs.
Throw in the disruptions to Asian trading as the beginning of the Chinese (Lunar) New Year starts on Friday, and it’s clear that this will be a week when anything can happen.
Monday brings the quarterly earnings of the biggest company in the world when measured by stock market value – Apple.
The company, which reports after the markets close, is under attack from corporate raider and activist investor Carl Icahn, who has built up a $3.6 billion stake in Apple and is urging the company to return a bigger share of its $146 billion cash hoard to shareholders. Icahn has asked other stockholders to support his demand for a $50 billion stock buyback by Apple.
Caterpillar and LG Electronics are among the other companies also reporting results on Monday.
Economic news will come from U.S. new home sales figures for December, a meeting of Euro-area finance ministers, and December trade data from Japan.
Tuesday brings earnings from Ford Motor, Yahoo, Pfizer, AT&T and Comcast, among others, and a U.S. Treasury bond auction of two-year notes.
Economic data will include a read on the U.S. Conference Board consumer confidence, U.S. home prices and durable goods orders, as well as China’s industrial profits and U.K. gross domestic product.
The biggest event of the day will of course be the annual State of the Union address by U.S. President Barack Obama.
Wednesday brings what could be the biggest financial news of the week -- the policy announcement from the Federal Open Market Committee. Many analysts expect the Fed to continue cutting its bond-buying by $10 billion a month until this unconventional program is phased out completely by the end of 2014.
This will be Ben Bernanke’s last Fed meeting as chairman. He retires on Friday, to be replaced by Brooklyn’s Janet Yellen.
Wednesday’s company earnings include results from Facebook, Fiat-Chrysler, Boeing, Qualcomm, WellPoint, Canon, Novartis and Nintendo. Wednesday also brings another U.S. Treasury bond auction – this time of floating-rate notes.
Thursday is expected to bring the first read on fourth quarter U.S. gross domestic product, and yet another U.S. debt auction – this time the Treasury hopes to sell roughly $29 billion in seven-year notes and $35 billion in five-year notes, according to Bloomberg data.
Thursday brings a huge day for company earnings, including Google, Amazon.com, Exxon Mobil, Eli Lilly, Visa, ConocoPhillips, PulteGroup, Time Warner Cable, Viacom and Lenovo.
On Friday, the pace does not relent. In economic news, analysts expect the University of Michigan consumer confidence report and a slew of indicators from Japan.
MasterCard, Chevron and Honda Motor are among the companies expected to announce earnings.
Finally, Friday brings the beginning of the Chinese (Lunar) New Year and The Year Of The Horse, an occasion that involves a mass migration of Chinese people around the world to visit families and the closing of some Asian financial markets for several days.
Kung Hei Fat Choy means Happy New Year -- but this festival also brings to mind the old Chinese curse of: "May you live in interesting times."
