Earnings, Davos — What to know in the week ahead

Heidi Chung

It will be a shortened trading week with markets closed Monday in observance of Martin Luther King Jr. day.

Markets will be put to the test this week with earnings season in full swing on the heels of big bank earnings last week. All three of the major indices closed at record highs Friday, and stocks logged their best week since August.

So far, Credit Suisse’s strategist Jonathan Golub noted that about 11% of the S&P 500’s market cap has reported fourth-quarter earnings. “Earnings are beating by 4.9%, with 71% of companies exceeding their bottom-line estimates. This compares to 5.2% and 71% over the past 3 years.”

Some of the heavyweights gearing up to report this week include Netflix, IBM, Procter & Gamble, Johnson & Johnson and American Express. “The consensus forecasts S&P 500 earnings growth to decline ~1% year-over-year; but if earnings beat by historical averages (~3-4%), earnings growth should find its way into positive territory,” Raymond James Chief Investment Officer Larry Adam wrote in his Jan. 17 edition of Weekly Headings. “As a result, an earnings recession (two straight quarters of negative earnings growth) could be avoided.”

Meanwhile, the world’s top business leaders and politicians will gather this week at the 50th annual World Economic Forum in Davos, Switzerland. This year’s theme is “Stakeholders for a Cohesive and Sustainable World” and will focus on the issues surrounding climate change. The event will take place Jan. 21 to Jan. 24. President Donald Trump will be attending the event and will be speaking Tuesday morning.

[Watch Yahoo Finance’s free live coverage of the 50th annual World Economic Forum]

In addition to President Trump, notable attendees include German Chancellor Angela Merkel, European Central Bank President Christine Lagarde, IMF Managing Director Kristalina Georgieva, U.S. Treasury Secretary Steven Mnuchin and climate activist Greta Thunberg.

Furthermore, the Federal Open Market Committee (FOMC) enters its blackout period this week ahead of its next meeting Jan. 28 to 29.

Yahoo Finance's live coverage of the World Economic Forum in Davos, Switzerland.

Earnings calendar

Monday: N/A

Tuesday: Halliburton (HAL) before market open; Capital One (COF), IBM (IBM), Netflix (NFLX), United Airlines (UAL) after market close

Wednesday: Johnson & Johnson (JNJ), JetBlue (JBLU), Baker Hughes (BKR) before market open; Texas Instruments (TXN) after market close

Thursday: American Airlines (AAL), Kimberly-Clark (KMB), Comcast (CMCSA), Freeport-McMoran (FCX), Procter & Gamble (PG), Southwest Airlines (LUV), Travelers (TRV), VF Corp (VFC), Union Pacific (UNP) before market open; Intel (INTC), Las Vegas Sands (LVS) after market close

Friday: American Express (AXP)

Economic calendar

Monday: Markets closed in observance of Martin Luther King Jr. holiday

Tuesday: N/A

Wednesday: MBA Mortgage Applications, week ended Jan. 17 (30.2% prior); Chicago Fed National Activity Index, December (0.15 expected, 0.56 in November); FHFA House Price Index month-on-month, December (0.3% expected, 0.2% in November); Existing Home Sales month-on-month, December (1.5% expected, -1.7% in November)

Thursday: Initial Jobless Claims, week ended Jan. 18 (214,000 expected, 204,000 prior); Continuing Claims, week ended Jan. 11 (1.750 million expected, 1.767 million prior); Bloomberg Consumer Comfort, week ended Jan. 19 (66.0 prior); Leading Index, December (-0.2% expected, 0.0% prior)

Friday: Markit US Services PMI, January preliminary (52.5 expected, 52.8 prior); Markit US Composite PMI, January preliminary (52.7 prior); Markit US Manufacturing PMI, January preliminary (52.5 expected, 52.4 prior)

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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