What to Look For in the Dow Today

Updated

It's been a rocky week for the Dow Jones Industrial Average (INDEX: ^DJI) . Despite two strong days coming on the heels of an earnings beat by Alcoa and an improved outlook in Europe, the index has still given back 75 points for the week. Friday's market serves up a bevy of news items that could shake stocks even more. Here's what investors should be paying attention to:

Two megacap banks report earnings this morning. JPMorgan Chase (NYS: JPM) will announce first at 7 a.m. ET, and Wells Fargo (NYS: WFC) will follow an hour later.

Analysts are eyeing earnings per share of $1.18 for JPMorgan, down from the $1.28 it posted a year ago. The Wall Street titan's investors had plenty to smile about during the last quarter as shares jumped about 20%, quarterly dividends increased from a quarter to $0.30, and the company passed the Federal Reserve's stress test, allowing it to implement a $12 billion share-buyback plan. My colleague Anand Chokkavelu thinks investors should look for an increase in capital as a key indicator of the bank's strength. For a detailed earnings preview, take a look at his recent article.


Wells Fargo is facing an earnings target of $0.73 per share when it reports, a step up from the $0.67 it brought in a year ago. Some analysts are interpreting positive signs in its earlier-than-normal release date, assuming the bank has good news it can't wait to break. Recent quarters have been favorable, with the company posting net income gains of 20% or more in its most recent three quarters, and last quarter's earnings set a new record at $3.9 billion.

Look for Bank of America (NYS: BAC) , Citigroup (NYS: C) , and others in the financial sector to move on the earnings releases. Citigroup releases earnings Monday morning and is expected to report EPS of $0.99, while Bank of America delivers earnings news Thursday morning. Analysts are expecting $0.12 per share from B of A.

Also likely to influence today's trading are two consumer behavior reports due out later in the morning.

At 8:30 a.m. ET, the Labor Department will release the Consumer Price Index for March. The figure measures the market price of a basket of goods and services and is the most widely used indicator to measure inflation. The market is expecting an increase of 0.3%, following a jump in February of 0.4%. Some analysts prefer to look at the core CPI, which excludes the particularly volatile food and energy sectors. February core CPI came in at 0.1%, and that figure is expected to rise to 0.2% for March. An index figure significantly higher than expected could weigh down markets on worries of increasing inflation.

Finally, the Michigan Consumer Index comes out at around 10 a.m. ET. Based on hundreds of telephone surveys, the index measures consumer confidence and is considered a leading indicator of consumer spending and the overall health of the economy. Because of its forward-looking nature, this number gets a close look from investors and retailers, as well as others looking for insight into the direction of the economy. The index is tallied by subtracting the percentage of unfavorable responses from favorable ones. Last month's figure was 76.2, and the market is expecting 76.1 for April.

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At the time thisarticle was published Fool contributorJeremy Bowmanholds no positions in the companies in this article. The Motley Fool owns shares of Citigroup, JPMorgan Chase, Wells Fargo, and Bank of America and has created a covered strangle position in Wells Fargo. Motley Fool newsletter services have recommended buying shares of Wells Fargo. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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