Nod off at your own risk as a potential snoozer in early market action could quickly change. Looming events include more Federal Reserve interest-rate intelligence and Alcoa’s (AA) quarterly results. The basic materials giant kick starts the heart of the next earnings round after the closing bell, launching what some industry analysts expect to be the weakest overall earnings-reporting season for S&P 500 companies in at least 2 ½ years. Oil industry deal news is also in play today, as even stock traders continue to keep close tabs on daily crude price swings. U.S.-traded crude futures have held near a closely watched $52 a barrel mark and stock traders are watching for any significant move away from that line. For its part, the S&P 500 (SPX) may continue to test either end of the now familiar range between major support at 2051 and a psychologically significant 2100 (figure 1).
Oil Sector Getting Cozy? Oil’s daily price swings have been a major catalyst for stocks since late last year but the impact of softer crude prices just got more intense. It now looks to be driving energy industry consolidation. Royal Dutch Shell Group (RDS.A, RDS.B) and BG Group are combining in a deal worth nearly $70 billion. The companies may be downplaying the direct impact of recent price declines in driving their deal-making, but energy analysts insist that consolidation may not stop with today’s tie-up. U.S.-listed shares of Shell fell in pre-market trading but deal buzz looked to lift competitors, including BP (BP), up some 4% in early U.S. action—yes, presumably on speculation that consolidation is only beginning.
Fed Insight? The Federal Reserve issues the minutes from its last policy meeting this afternoon but the potential for market impact from that release isn’t clear. That’s largely because the meeting preceded the soft March payrolls report that much of Wall Street believes could be stumping Yellen and crew. Now, there may be a few clues on interest-rate policy after all, as several central bankers take the podium in a sprinkling of speeches. One already went on this morning. Fed Governor Jerome Powell said in a morning speech that he expects economic conditions will support a rise in interest rates later this year. New York Fed President William Dudley is due to be interviewed by Reuters.
Earnings: Materials and Retail. Investors will be watching to see if Alcoa, which rises and falls with the fortunes of one major product —aluminum — remains as upbeat on the outlook for global aluminum demand as it was three months ago, even as prices have continued to fall. In a soft earnings season launch, a few retailers are already out with their results. What they say matters too, of course, considering how vital consumer spending is to ramping up the economic recovery. Pharmacy chain Rite Aid (RAD) is lower in early action, finding little traction on better-than-expected fiscal Q4 earnings. Family Dollar Stores (FDO) tilts lower after its earning beat the Street view but same-store sales growth disappoints. Bed Bath & Beyond (BBBY) will also report after the market’s close.