Following up a Friday sell-off that limited gains to 0.36% and 0.43% last week, the Dow Jones Industrial Average (INDEX: ^DJI ) and S&P 500 (INDEX: ^GSPC ) are poised to open lower at the start of another earnings-report-fueled week. As of this writing, futures on the two major U.S. indexes are indicating a 1% lower open following significant declines in European markets. Though stocks look like they'll take a step back early this morning, let's take a look at three E's that will help determine investor sentiment throughout the week.
The crux of this morning's weakness, Europe, has hidden behind the veil of U.S. corporate earnings in recent weeks, only to return to haunt markets on Friday. The primary culprit is Spain -- the eurozone's fourth largest economy -- and the growing likelihood that it will require a full-fledged sovereign bailout. Today, Spanish 10-year bond yields are hitting euro-era records of more than 7.5% following a dismal monthly economic report from Madrid. Reports surfaced that as many as six of Spain's 17 regions could require aid from the central government. Tensions will also be high in Greece, which receives a visit from creditors this week to determine its progress, or lack thereof, in meeting the commitments of its own bailout.
Domestic economic data may take a back seat to Europe and earnings this week, but nonetheless a few important reports are due out. On Wednesday, data on June new-home sales are released, with expectations for a slight increase in purchase activity. Thursday is a big day for data, with weekly jobless claims and a reading on durable-goods orders released ahead of the market's open. On Friday, investors will receive an initial reading on second-quarter GDP growth, which is forecast to have expanded at a 1.5% annual rate.
High-profile names in consumer technology are set to report earnings this week, with Netflix (Nasdaq: NFLX ) and Apple (Nasdaq: AAPL ) reporting on Tuesday, followed by releases from Amazon.com and Facebook (Nasdaq: FB ) on Thursday. Netflix sales are expected to grow just south of 13% for the quarter, though international expansion will continue to weigh on earnings.
Apple's revenue and earnings are estimated to grow about 30% for the quarter as investors anticipate the release of its newest iPhone later this year. To receive a full take on Apple ahead of the release, be sure to check out our new premium research report on the company. In it, our top technology analyst walks through the key aspects of the Apple story, including both opportunities and risks facing the company.
For Facebook, analysts are calling for earnings per share of $0.12, though the company's first public earnings call is likely to garner the majority of attention. Facebook has a lot to prove following its botched IPO in May. The company still trades at a premium valuation despite what appear to be glaring flaws in its ability to monetize its user base. In our new special free report, entitled "Forget Facebook -- Here's the Tech IPO You Should Be Buying," we outline those problems, as well as an alternative online player that deserves more attention that it receives. Click here to claim you free copy.