Stocks: Investors brace for volatility

@CNNMoneyInvest June 5, 2012: 11:40 AM ET

NEW YORK (CNNMoney) -- The stock market has wobbled throughout April, and the week ahead on Wall Street will probably be another rough one.

Stocks ended a choppy week lower on Friday as concerns about an economic slowdown in China overshadowed a batch of better-than-expected corporate earnings reports.

The major indexes all suffered their biggest weekly declines of the year. The Dow fell 1.6%, the S&P 500 sank 2% and the Nasdaq declined 2.3% over the last five trading days.

Investors have been rattled by concerns about government debt in the euro area and signs that global economic activity is slowing down, according to Simon Hayes, an economist at Barclays Capital. The market will probably continue to focus on these issues next week, which means trading could be volatile.

"A speedy resolution of these issues seems unlikely, and although we expect global activity to improve during the course of the year, the path of financial markets is unlikely to be smooth," Hayes wrote in a research report.

In Europe, investor will be watching auctions of Spanish government bills on Tuesday and bonds on Thursday. Spain has been struggling with rising borrowing costs as investors fear the government will not meet its fiscal targets and may need to be bailed out.

European Central Bank president Mario Draghi will speak at a conference in Frankfurt on Tuesday, and investors will be listening closely for hints that the central bank is prepared to renew its interventions in the bond market.

"Next week sees plenty of data releases from Europe; markets are likely to watch the Spanish bond auction results with particular interest," said Geoffery Kendrick, a foreign exchange strategist at Nomura Securities, in a note to clients. "U.S. economic and earnings data are also frequent, which should help to provide greater clarity in relation to the recent weaker employment data."

Earlier this month, the Labor Department said hiring in March slowed sharply from the month before, although the general trend in payrolls had been improving before that. The jobs report highlighted worries that the recent string of upbeat data was distorted by warm weather, and raised concerns about the outlook for economic growth.

However, stocks may find some support from corporate America as first-quarter results begin pouring in next week.

The week ahead brings reports from 84 of the companies in the S&P 500 and 12 of the 30 companies in the Dow Jones Industrial average.

Big banks such as Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500), Goldman Sachs (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500) will announce quarterly results next week. Technology companies Intel (INTC, Fortune 500), Microsoft (MSFT, Fortune 500) and Yahoo (YHOO, Fortune 500) will also release quarterly data next week.

Coca Cola (COKE), Johnson & Johnson (JNJ, Fortune 500), American Express (AXP, Fortune 500), Verizon (VZ, Fortune 500) and General Electric (GE, Fortune 500) are among the blue chips reporting.

So far, corporate profits and sales have been surprisingly resilient. Of the 32 companies in the S&P 500 that have reported results, 75% have beat earnings expectations and 84% have surpassed sales forecasts, according to FactSet.

Meanwhile, investors will get a fresh reading on American consumers with retail sales data for March due on Monday.

The economic calendar also includes key reports on the housing market, such as March housing starts and building permits, as well as existing home sales data for the same month.

Later in the week, finance officials from the world's leading economies will gather in Washington, D.C., for the spring meetings of the World Bank and International Monetary Fund.  To top of page

Index Last Change % Change
Dow 17,279.74 13.75 0.08%
Nasdaq 4,579.79 -13.64 -0.30%
S&P 500 2,010.40 -0.96 -0.05%
Treasuries 2.59 -0.04 -1.60%
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Company Price Change % Change
Yahoo! Inc 40.93 -1.16 -2.74%
Microsoft Corp 47.52 0.84 1.80%
Bank of America Corp... 16.95 -0.09 -0.53%
Oracle Corp 39.80 -1.75 -4.21%
Facebook Inc 77.91 0.91 1.18%
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