Money & Markets Week Ahead: What to Watch on Wall Street

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With light earnings scheduled for this week, the big news is the Dow Jones Industrial Average‘s major change. This will happen before the market opens on Monday.

Last week, the Dow announced that three companies — including one that’s been listed on the index since 1928 — were coming off, and it’s adding three new companies.

The companies that are leaving are:

  • Exxon Mobil Corp. (NYSE: XOM).
  • Drug maker Pfizer Inc. (NYSE: PFE).
  • And aerospace giant Raytheon Technologies Corp. (NYSE: RTX).

Replacing them are:

  • Salesforce.com Inc. (NYSE: CRM).
  • Amgen Inc. (Nasdaq: AMGN).
  • And Honeywell International Inc. (NYSE: HON).

Here’s what prompted the change: Apple Inc. (Nasdaq: AAPL) announced a 4-to-1 stock split that will significantly lower the share price of the $2 trillion company.

That has a massive impact on the Dow Jones because the index the share prices of the 30 companies listed reflect the index.

Pro tip: We recently discussed this change on an episode of The Bull & The Bear podcast. To watch that podcast, click here.

As I mentioned in the video, the change doesn’t mean a whole lot to individual investors — unless you are investing in the six impacted companies or an exchange-traded fund (ETF) tracking the Dow.

The three companies coming on to the Dow have jumped in share price, while the three leaving have fallen.

But investors will watch to see how the move away from oil and gas affects the overall stock market.

On the IPO Front

It’s another quiet week for initial public offerings (IPO).

A few companies will exit their quiet periods.

All are related to health care. They are:

  • Inozyme Pharma Inc. (Nasdaq: INZY).
  • Annexon Inc. (Nasdaq: ANNX).
  • Deerfield Healthcare Technology Acquisitions Corp. (Nasdaq: DFHTU).
  • iTeos Therapeutics Inc. (Nasdaq: ITOS).
  • Nurix Therapeutics Inc. (Nasdaq: NRIX).

A “quiet period” refers to the mandated time frame where company insiders — company management and marketing teams — are forbidden from sharing opinions or additional information about the company.

Under Securities and Exchange Commission guidelines, a quiet period for an IPO lasts from the time the IPO registration statement is made available to 40 days after the stock begins trading.

Outside analysts can still give their thoughts on the company, but the company can’t.

Money & Markets Week Ahead: Data Dump

On Tuesday, IHS Markit will release its final manufacturing purchase managers index for August.

This gauges the strength of the manufacturing sector in the U.S.

The index was at 53.6 at last check — meaning a slight uptick in manufacturing. A reading of 50 or above indicates an expansion in the sector. On the other hand, 49 or below indicates contraction.

Investors will get a peek into construction spending on Tuesday morning as the Department of Commerce unveils July figures.

Construction spending was down 0.7% in June despite sharp increases in new home building.

Another piece of information investors will be eyeing is the Federal Reserve’s Beige Book — scheduled for release at 2 p.m. Wednesday.

The Fed publishes the book eight times a year. It’s a compilation of each Federal Reserve Bank’s information regarding current economic conditions.

In July — when the last Beige Book was released — overall economic activity in the U.S. increased, but was still well below pre-COVID. All sectors saw slight growth, including retail sales, food and beverage, and leisure and hospitality.

On Thursday, the U.S. trade deficit for July will be released. The deficit, as of June, stands at minus-$50.7 billion.

Earnings Reports

To finish off the Money & Markets Week Ahead, here’s a look at some of the key earnings reports due out next week:

Monday

Rackspace Technology Inc. (Nasdaq: RXT).

Zoom Video Communications Inc. (Nasdaq: ZM).

Tuesday

H&R Block Inc. (NYSE: HRB).

Shoe Carnival Inc. (Nasdaq: SCVL).

Wednesday

Crowdstrike Holdings Inc. (Nasdaq: CRWD).

Five Below Inc. (Nasdaq: FIVE).

Macy’s Inc. (NYSE: M).

Thursday

Campbell Soup Co. (NYSE: CPB).

Docusign Inc. (Nasdaq: DOCU).

Friday

No earnings scheduled.

Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.

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