The psychological tug-of-war that has kept the markets off balance for the last few weeks may finally be resolved Tuesday when the Federal Reserve Board meets to determine its next move on interest rates.
Each trickle of economic news over the past few weeks has left investors torn, as the angel of interest-rate cuts whispers "buy" in one ear, while the devil of economic doldrums intones "sell" in the other.
When the Labor Department released unemployment data May 4 that showed a dramatic increase in people filing for unemployment benefits in April, stocks initially slid. But the worse-than-expected numbers sparked a recovery when investors figured the data could help tilt the Federal Reserve toward its fifth rate cut this year.
If the Fed doesn't respond with a half-percentage-point cut this Tuesday, the stock market could be in for a sharp drop.
"We need the Fed to continue to drip us Novocain," UBS Warburg analyst Pip Coburn said in a report. Coburn expects another 50-basis-point cut at the meeting.
A steady stream of earnings reports will also keep investors busy piecing together the big picture for the technology sector next week.
In addition, the video game industry's gigantic trade show, the Electronic Entertainment Expo (E3), kicks off in Los Angeles.
Other events scheduled this week:
- CardTech/SecurTech 2001 will take place at the Sands Expo and Venetian Hotel in Las Vegas, May 14-17. The conference will address issues related to smart cards, biometrics and PKI. Smart cards are credit card-size cards with an imbedded chip that can be used to store data and make transactions. Biometrics refers to technology such as retinal or fingerprint scanning that is used for identification purposes. PKI, or public key infrastructure, is a method of securely exchanging information on the Internet.
- Robert W. Baird & Co. will host its Growth Stock Conference at the Four Seasons Hotel in Chicago, May 14-16. The event features presentations from more than 100 fast-growing companies, with nearly three-fourths representing the business solutions, health care and communications industries. Companies represented include ADC Telecommunications, Akamai, Digital Lightwave and Digital Island. Call 800-648-4788 to RSVP.
- The Cellular Telecommunications & Internet Association will hold WirelessAgenda 2001 at the Adam's Mark Hotel in Dallas, May 14-18. The conference will focus on trends in the wireless industry. Speakers will include executives from Ericsson, Motorola, IBM and AOL Time Warner.
- Cingular Wireless will host the Wave 2001 at the Aladdin Resort in Las Vegas, May 14-17. The conference is for companies interested in using wireless business technology to help run their business. Keynote speakers will include Sun Microsystems Vice President Anne Wetterstein, Garage.com CEO Guy Kawasaki, Palm CEO Carl Yankowski and Cingular CEO Stephen Carter.
- Credit Suisse First Boston will conduct its Communications Technology Conference at the Arizona Biltmore Resort & Spa in Phoenix, May 14-17.
- COMMON will hold its Spring IT Education Conference in New Orleans, May 14-17, for professionals who wish to learn about information technology.
Tuesday, May 15
- CIBC World Markets will hold its Electronics Conference at the New York Palace Hotel, May 15-16. The event features presentations from manufacturers of chips and components used in storage computers, servers and other systems. Scheduled presenters include Flextronics International, Applied Micro Circuits and Marvel Technology.
- Banc of America Securities will host its Telecom, Media & Entertainment Conference at the Pierre Hotel in New York, May 15-17. The event will cover the wireless, cable, broadband and broadcasting industries. Featured speakers include Verizon Wireless CEO Denny Strigl, Verizon Communications CEO Charles Lee and Clear Channel Communications CEO Lowry Mays. Information: (415) 913-6326.
- InfoToday 2001 will take place at the New York Hilton, May 15-17. The event covers how corporations store information in corporate libraries and use the information for business practices.
Wednesday, May 16
- The Electronic Entertainment Expo (E3), the video game industry's main trade show, runs in Los Angeles, May 16-18. Microsoft will reveal the price and on-sale date of its Xbox game console, and Nintendo is expected to have similar details on its upcoming GameCube. Speakers will include executives from Sony, Microsoft and Nintendo.
- The Investment Company Institute will hold its annual General Membership Meeting at the Hilton Washington Hotel and Towers in Washington, D.C., May 16-18. The conference gives mutual funds mangers the chance to discuss industry topics. Keynote speakers will include Charles Schwab and Philip Purcell, CEO of Morgan Stanley.
- Vitalwork will host the ILEC Competitive Practices Conference at Hilton Head Island, S.C., May 16-18. The event provides professionals from start-up phone companies the opportunity to network and discuss trends within the industry. Featured speakers include Oxford Telecom President Rick Anstey and Jerry Carr, former executive vice president of Frontier/Global Crossing.
- The Carmel Group will hold Convergence 2001 at the Fairmont Hotel in San Francisco, May 16-17. The event will address issues affecting the delivery of content via streaming media and broadband. Featured speakers will include iBeam CEO Peter Desnoes and Candice Myers, senior vice president of TV & Broadband at CNET Networks, publisher of News.com
Thursday, May 17
- DoubleClick will sponsor a seminar on rich media advertising, called "What's Clicking in Rich Media," at the W Hotel in San Francisco. The event is targeted at professionals who want to learn more about the effectiveness of Internet advertising.
- Bear Stearns will host a panel called "VC Insights" that will discuss current issues within the industry and its outlook at the Mandarin Oriental Embassy Room, 222 Sansome St., San Francisco, 8:00 a.m. PDT. RSVP to Hillary Novick, (212) 272-3571. Also available via conference call (800-683-1535 or 973-633-6740; replay at 888-888-9540 or 402-220-9917, PIN #3301). Panelists will include Edward Colby, general partner, Viventures; Phil Sanderson, general partner, WaldenVC; Greg Smitherman, general partner, Advent International; Jason Strober, general partner, VantagePoint Venture Partners; and Bob Williams, general partner, Bay Partners).
- The Global e-Learning 2001 Summit will take place at the Whistler Convention Centre in Whistler (near Vancover), British Columbia, May 17-19. The conference will provide presentations and panels on education through the Internet and opportunities for buyers and sellers to meet. Sectors covered will include K-12, higher education, continuing education, corporate training, investors, government and nonprofit organizations. Keynote speakers will include Click2Learn CEO Kevin Oakes.
Also this week
- Optical equipment maker Tellium is set to launch its initial public offering. The IPO should help gauge the health of the communications sector since only Riverstone Networks has dipped into the public markets thus far this year. Tellium's performance could also hint at the changing view of the optical networking industry, once blooming with optimism and soaring valuations with the likes of Sycamore Networks and Corvis.
Monday, May 14
- Gilat Satellite Networks operates a fleet of communications satellites. Per-share consensus estimate for the first quarter: loss of 10 cents.
- 24/7 Media provides advertising outsourcing resources to Web sites. Per-share consensus estimate for the first quarter: loss of 55 cents.
- BEA Systems makes e-commerce software for businesses and corporations. Per-share consensus estimate for the first quarter: profit of 7 cents.
- Network Appliance makes computer data storage equipment and software. Per-share consensus estimate for the fiscal fourth quarter: profit of 2 cents.
- Sycamore Networks makes optical equipment for long-distance communications networks. Per-share consensus estimate for the fiscal third quarter: loss of 18 cents.
- 360networks operates a fiber-optic cable communications network. Per-share consensus estimate for the first quarter: loss of 17 cents.
- Brocade Communications Systems makes switches and software for computer data storage networks. Per-share consensus estimate for the fiscal second quarter: profit of 5 cents.
- Applied Materials produces chip manufacturing equipment for chipmakers. Per-share consensus estimate for the fiscal second quarter: profit of 33 cents.
- TD Waterhouse Group offers online brokerage services. Per-share consensus estimate for the fiscal second quarter: profit of 5 cents.
- Hewlett-Packard makes computers, printers, peripherals and software. Per-share consensus estimate for the second quarter: profit of 16 cents.
- Agilent Technologies makes test equipment used to evaluate telecom and computer network equipment, semiconductors, and other electronic devices. Per-share consensus estimate for the fiscal second quarter: profit of 27 cents.
- Ciena manufactures equipment for optical communications networks. Per-share consensus estimate for the fiscal second quarter: profit of 16 cents.
- Analog Devices makes chips for communications equipment, computers and peripherals, and medical instruments. Per-share consensus estimate for the fiscal second quarter: profit of 31 cents.
- Dell Computer builds desktop computers. Per-share consensus estimate for the first quarter: profit of 17 cents.
Monday, May 14
- Business Inventories represents the percentage change in the amount of goods in inventory in the United States as reported by the Department of Commerce. Wall Street predicts inventories will fall 0.2 percent in March vs. a 0.2 percent drop in February.
- Industrial Production represents the monthly percentage change in industrial output as reported by the Federal Reserve. The number measures the physical quantity of items produced, unlike the sales value, which combines quantity and price. Economists expect production to decrease 0.2 percent in April compared with the previous month's rise of 0.4 percent.
- The monthly Capacity Utilization report from the Federal Reserve indicates the percentage of industrial capacity in use. Wall Street expects the number to fall to 79.1 percent in April from the previous month's 79.4 percent.
- The Consumer Price Index is expected to rise 0.4 percent in April from the previous month's rise of 0.1 percent. The core CPI, which excludes food and energy prices, is expected to rise 0.2 percent from March's 0.2 percent increase. This Labor Department index tracks the change in prices at the consumer level.
- Housing Starts are expected to dip to 1.605 million for April, down from 1.613 million in March, as reported by the Department of Commerce.
- The Federal Open Market Committee, the policy-setting arm of the Federal Reserve, meets to discuss interest rates. The general consensus on Wall Street is that interest rates will be lowered.
- Initial Claims refers to the number of people who filed for unemployment benefits each week as reported by the Department of Labor. Claims will be reported for the week of May 12.
- The Philadelphia Federal Reserve's monthly Business Outlook Survey is a survey of manufacturers in the Third Federal Reserve District that tracks the direction of change in overall business activity at their plants. Wall Street expects the index to decline to negative 10 for the month of May from the previous month's negative 7.2.
- The index of Leading Economic Indicators (LEI) is expected to climb 0.1 percent for April as compiled by the Conference Board, a business group. In March, the LEI fell 0.3 percent. The index, designed to signal peaks and troughs in the business cycle, is a combination of 10 indicators, including consumer expectations, money supply data, and the change in housing permits issued. A negative reading generally indicates an oncoming recession, while a positive value signals an expansion.
- The Trade Balance, or the value of U.S. imports subtracted from exports, is expected to widen to a deficit of -$29 billion in March from -$27 billion in February as reported monthly by the Commerce Department.