Within 24 hours, investors were treated to Atlanta Fed President, Dennis Lockhart saying QE3 might be a no-no and FOMC minutes hinting at yes-yes-yes. The street's interpretation of the central bank's September intentions lifted stocks off the floor Wednesday afternoon. Heck, the NASDAQ and the S&P even managed to get above water by the final bell.
If only volume would get into the game. But market pros say don't worry about the lack of volume in 2012, a five year low. They profess that it's different this time, no it really is and that we better get used to it as the new norm – sort of like 8% unemployment. iStock always start sniffing for smoke when the "it's different this time" bomb gets dropped. It's never different.
Maybe the markets can get a jump start from this morning's Jobless Claims report. Economists believe the report will print 365,000 new claims when the numbers are announced at 8:30 am EST. State employment reports show that a majority of the states saw unemployment rise in the last few weeks. On the back of that news, iStock believes we could see more joblessness than anticipated.
At 10 am EST, new home sales will get their crack at lifting equity prices. The consensus is for 362,000. With existing home sales off the mark a touch, we believe new homes could tag along below forecasts.
Beyond the two major economic reports, there isn't much left to move stocks one way or the other. We suspect, continued hope of free Wall Street cheese could drive stock higher, or at the worst, keep losses small.
This will be the last week that iStock will review 2nd quarter earnings results, maybe one more week. With all but about 20 S&P 500 companies earnings on the books, the quarter has been lackluster. Sales are up only 1.74% year-over-year, operating earnings improved the most at 3.95%, and as reported earnings barely budged compared to the same timeframe in 2011, improving by 0.15%.
QE3 might be the last, best hope for stocks to continue higher. Analysts are cutting third quarter profit projections. As we have mentioned before, the direction of earnings revisions are typically a leading indicator of which way stocks are headed.
We'll see you tomorrow with our iEstimates.
(image courtesy - Federal Reserve image by Shutterstock)