Investors following the Dow Jones Industrials (DJINDICES:^DJI) are looking forward to the beginning of earnings season, with the chance to get the latest read on how the Dow's 30 components are faring in what appears to be a solid economic environment. Even as Nike (NYSE:NKE) reports on Thursday, though, economic data will continue to move the Dow and the stock market generally. Let's take a look at three key areas in which we'll see economic reports this week and their potential impact not just on Nike but also on Home Depot (NYSE:HD), Boeing (NYSE:BA), and the rest of the Dow Jones Industrials.
Housing remains in focus
Investors will see substantial amounts of housing data this week. Existing-home sales will come out Monday, but the biggest set of data will be available Tuesday, with new-home sales figures as well as the latest S&P Case-Shiller readings on home prices. In general, economists expect reasonably good figures on both fronts, with both existing and new home sales climbing in roughly the 2% range and the Case-Shiller numbers showing a 0.8% monthly gain in prices for its key 20-city index.
Home Depot stands to gain the most from continued strength in housing. Last week's reading on the Leading Economic Index led to some questions about the home-improvement retailer's future prospects, with a large drop in building permits having been the only blemish on what was otherwise a strong report. In order to be as profitable as possible, Home Depot needs to see solid levels of activity not just from building contractors but also from homeowners and their do-it-yourself projects. If housing data is good, it could help send housing-related stocks throughout the market higher.
On Wednesday, investors will get readings on durable goods orders in conjunction with broader GDP figures. The GDP reading is unlikely to move markets because it's the second revision of the first-quarter number, but durable goods orders are seen as being likely to slow from the previous month's pace, with projections for a 0.4% gain.
One wild card for durable goods is aircraft sales, in which Boeing has huge influence. The impact of order sales for aircraft can be so large that many economists focus on removing transportation-related orders from the durable goods numbers, looking instead at "core" durable goods that exclude volatile auto and aircraft sales. Nevertheless, customer willingness to spend on long-lived goods has helped vault Boeing higher and should continue to do so in the future.
Are consumers strong?
On Thursday, investors will see how the consumer is doing, with releases of personal income and consumer spending figures. Economists see both figures matching each other with 0.4% gains, and many will look at the change in an important measure of consumer prices for signs of inflation.
Nike and other premium consumer-goods companies need healthy levels of personal income to push spending higher. If interest rates start to rise, then it'll be even more important for Nike to see ordinary consumers to start getting the benefit of an improving economy in the form of greater disposable income. Otherwise, sales might not meet the expectations Nike's shareholders have of the athletic giant.
Watch for surprises
Economic data will start to move to the back burner as earnings reports come fast and furious beginning next month. Nevertheless, be sure to watch these releases to keep earnings in perspective and to identify longer-term trends.