The Fed, Goldman, and Research in Motion in the Spotlight
This week, investors will have one eye on earnings and the other on the Federal Reserve. The Federal Reserve is expected to make an announcement on interest rates on Tuesday afternoon (12/16), which should set the tone for the rest of the week.
Futures contracts on the Chicago Board of Trade showed 84 percent odds that the Fed will trim its 1 percent target rate for overnight bank loans by 75 basis points to 0.25 percent. The probability was zero a month ago.
Also on Tuesday, investors will be focused on earnings from Goldman Sachs
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PowerRating). The investment bank was the focus of much speculation in recent weeks over how big a quarterly loss it will report. Some analysts are calling for a fourth-quarter loss of $2 billion, or $5.00 per share. Hovnanian Enterprises
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PowerRating), and Research in Motion
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PowerRating) are also set to report quarterly results this week.
Goldman Sachs may be a tough one to trade into next week as estimates range wildly. Analysts are calling for earnings in a range of a $0.23 per share profit to a loss of $6.00 per share when the company reports before the open on Tuesday. Despite rarely making aggressive earnings-driven pre-market movements, Goldman’s results will likely set off some volatile trading. In the near-term, Goldman shares have a tendency to cut back or reverse their pre-market direction in the regular trading session. On Sept. 16, shares tumbled 12.5% in the pre-market after Goldman’s third-quarter results missed the Street. The stock regained most of the loss in the regular session, ending down 1.8%.
Research in Motion is set to release its third-quarter results after the close on Thursday (12/18). The maker of the BlackBerry has seen its shares tumble 63% over the past year as delayed product roll-outs and limited supplies of its newest phones plague its move into the consumer market. However, Research in Motion is expected to report earnings of $0.81 per share, up from $0.61 per share a year ago, on revenue of $2.8 billion, according to Thomson Reuters estimates. The stock has a near-term tendency to widen its after-hours move in the following regular session, doing so three out of the past four quarters. On Sept. 25, shares plunged 21% in after-hours trading after RIMM said its profits would shrink due to the cost of launching new smart phones. Shares widened their decline in the following trading session, ending down 27.4%.
Cassie Slane is a Senior Editor at www.MidnightTrader.com.