Equities opened the week with a strong rally following a shift in Brexit polling.
Fed Chair Janet Yellen will deliver her semi-annual testimony before Congress on Tuesday and Wednesday. Investors hope for clarification on the mixed signals sent by the Fed in recent weeks.
Existing home sales for May will be released on Wednesday. Economists forecast 5.60 million homes were sold, up from 5.45 million the month earlier. Analysts forecast new home sales fell to 560,000 in May, down from 619,000 in April. On Thursday, weekly jobless claims are forecast to fall to 270,000, still hovering at 40 year lows. The Markit flash PMIs for June will also be available this week.
Durable goods orders for May will be out on Friday. This number will merge with housing data to inform GDP forecast updates. Analysts predict the University of Michigan Consumer Sentiment Index for June will match May’s at 94.3.
In addition to the Brexit vote’s potential market impact, Friday may be a busy trading day due to the annual rebalancing of the FTSE Russell indexes. Mutual funds and ETFs tracking these indexes will have to adjust their holdings to match the new index holdings and weightings.
Once Brexit is out of the way, investors will turn to the European economy. The German economy is slowing in the current quarter, but should rebound in the second half. The central bank also called on the European Central Bank to begin raising interest rates when the 2 percent inflation target is in sight, rather than waiting for inflation to reach the target range. Currently, the ECB does not foresee 2 percent inflation in the next two years. ECB President Mario Draghi speaks on Tuesday, and flash PMIs for Europe will be closely watched on Thursday, particularly for Germany in light of the Bundesbank’s comments.
Adobe Systems, FedEx, Bed, Bath & Beyond and BlackBerry are scheduled to report earnings this week. High-profile software company Adobe Systems (ADBE) is expected to release consensus earnings per share of $0.68 on quarterly revenues of $1.4 billion Tuesday. FedEx (FDX) is scheduled to deliver EPS of $3.28 and revenues of $12.79 billion. Investors will key in on the company’s operating margins in the tightening airfreight and logistics market. FedEx reports often lend insight into the global economy as well. Bed, Bath and Beyond (BBBY) reports earnings Wednesday. Consensus estimates are for EPS of $0.86 and revenues of $2.78 billion. BlackBerry (BBRY) will report on Thursday. Analysts expect a loss of $0.08 per share on revenues of $470.7 million. Investors will focus on the company’s software business as this becomes the company’s core business moving forward.