The Dow Jones Industrial Average (INDEX: ^DJI) has had another volatile week. Earnings season, coupled with concerns over European sovereign debt, in particular Spain's, continue to rock the markets. The Dow goes into Friday up nearly 1% for the week, though it's lost ground over the past two days. Let's take a look at what could affect the blue chips as we head into the weekend.
Two Dow components report earnings this morning.
McDonald's (NYS: MCD) will lead off, reporting on its first quarter at 8:00 a.m. ET. In a year when the broad market had its best first quarter in more than a decade, shares of the Golden Arches are actually down 5% for the year. The world's biggest restaurant company took a hit in March, when its February same-store sales disappointed, up 7.5% for the month, which was short of analysts' estimates. That sent shares down more than 3% in just one day, and they've languished around that mark since then. The fast-food chain also announced a change at the helm a month ago. CEO Jim Skinner, who led McDonald's to market-crushing returns since taking the reins in 2004, is retiring and will be replaced by current COO Don Thompson on July 1. Thompson is a company veteran and was instrumental in the restaurant's McCafe rollout.
Analysts are expecting a $1.23 profit per share, up from $1.15 a year ago, and a 7% bump in revenue to $6.54 billion.
General Electric (NYS: GE) will also be releasing before the market opens at a bright and early 6:30 a.m. ET, with its conference call scheduled for 8:30 a.m. The conglomerate has moved in line with the broad market so far this year, moving up 7% in 2012. Analysts are expecting an EPS of $0.33, even with profits from the quarter a year ago, but they're predicting revenue to drop 9.7% to $34.7 billion. GE's health-care division is likely to take a hit from European austerity measures, as Europe's struggling countries cut health-care spending. Some analysts see as much as a 10% drop in European health-care sales for the world's largest maker of medical imaging devices. The company's financial division also leaves it exposed to still-shaky financial markets and concerns over Europe. Moody's recently downgraded its credit rating, saying the financial division was overly dependent on short-term borrowing.
For major economic reports, Germany's update on its Producer Price Index could provide further insight into the health of European economy. Attempts to stabilize European coffers continued yesterday, with another round of bond sales in France and Spain. Investors have been particularly worried about Spain's sluggish economy and the potential bailout or austerity measures that are likely to ensue on the Iberian Peninsula.
With Europe in the doldrums, some investors may be getting frustrated with the market's recent drop, but earnings season represents a great opportunity to make your stock picks count. With that in mind, our experts at the Fool have prepared a timely report on "5 Stocks Investors Need To Watch This Season." It includes two big tech companies and an up-and-coming natural gas player that you'll want to learn more about. Get your copy now before earnings seasons passes you by.
At the time thisarticle was published Fool contributorJeremy Bowmanholds no positions in the companies in this article.Motley Fool newsletter services have recommended buying shares of McDonald's and Moody's. 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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