US equities still under pressure

MARKET OUTLOOK

- US: Friday's rally in Europe and positive comments from Texas Instrument failed to translate into gains on Wall Street. US markets closed sharply lower WoW. Stocks from the energy, materials and semiconductors sectors fell most. Inflation risk remains the principle driver for the market and Tuesday's PPI and Wednesday's CPI will be key data for the week ahead. The April Trade Deficit widened to $63.4bln from $61.9bln the previous month but less than anticipated ($65bln). US indices should remain under pressure for now.


- EUROPE: European markets fell across the board with all DJ Stoxx sectors declining. The ECB raised its benchmark rate 25bp, as expected. There are few earnings reports expected this week. On the economic front, watch Tuesday's German CPI and Wednesday's French CPI. On the index side, the risk is still for further downside with any bounce potentially taken by investors as an opportunity to exit long or take new bearish position.



COMPANY PREVIEW


Lehman Brothers Holdings (USD 65.61 ; -2.84% ; LEH ; LEH.N)

Today Lehman Brothers publishes its 2Q results. The market will be looking for an EPS of $1.60, up from $1.13 same time last year, below however the record setting $1.75 recorded in the 1Q. The bank's EPS estimate was recently raised to $1.63 from the market consensus by JPMorgan.


Goldman Sachs (USD 149.89 ; -2.73% ; GS ; GS.N)

On Tuesday Goldman Sachs reports its 2Q results. BAA, which has been takeover target of Goldman Sachs, announced last week it had ended talks with the bank and had accepted Grupo Ferrovial's offer. EPS expected to surge to $4.18 from $1.13 ago, still below record levels of the 1Q.


Best Buy (USD 50.39 ; -4.2% ; BBY ; BBY.N)

On the same day Best Buy delivers its 4Q results. EPS seen rising 6% to $0.36 from a year ago on revenue which is expected to have jumped 12% to $6.84bln.


Inditex (EUR 29.62 ; -2.89% ; ITX ; ITX.MC)

On Wednesday Inditex, owner of ZARA retail chain, reports its 1Q earnings. The stock was recently raised to "overweight" from "neutral" by JPMorgan.


Bear Stearns Companies (USD 136.35 ; -0.68% ; BSC ; BSC.N)

And finally on Thursday Bear Stearns posts its 2Q results. The market will be looking for an EPS of $3.07, once again below the $3.54 posted last quarter, above however the $2.09 recorded same time last year.