After Earnings, What's Next for Stocks?

As earnings season draws to a close, MoneyShow's Jim Jubak outlines what he thinks may move stocks in the month of May.

Earnings season is really going to be pretty much over by the end of April.

There are still some companies to report, laggards or companies that have odd fiscal years, but, by the end of April, it will be basically over and the question really is what comes next, what is the market going to think about next?

On April 29, sort of to put a punctuation mark at the end of earning season, we've got the first read on first quarter GDP, it comes kind of late this year, so we'll know what growth is going to look like. Right now, it looks like the forecasts are all for pretty weak growth, all sub-2%, but there's still a pretty big spread. The Atlanta Fed has basically said 0%, Wall Street economists are saying 1.5%, so that's your spread. It would still be pretty weak, weaker even than the fourth quarter, which was 2.2%, which was thought to be a pretty big comedown from third quarter growth above 5% so that's where we're going, that's what we're looking at, so we'll get that read then.

Then, the question is, well, what happens next?

You won't really have any earnings for a while. The big economic news will be about trying to guess what the Fed is going to do. If the GDP number is sufficiently weak, which is what it looks like, I think it will pretty much take June off the table for our first Fed increase so that won't even be out there, so the question is what's going to move the market at this point.

It's, of course, speculation about what the world's Central Banks will do. It might be some good news out of Greece but bad news out of Greece hasn't been moving the market either so it looks like we've got kind of news vacuum after the end of earning season without a real strong driver either up or down for the stock market.

The one thing that makes me think maybe slightly downward is that we are trading at record highs on a lot of these indexes. The NASDAQ, for example, has moved back up to where it was before the crash in 2000, so is a lack of news going to be enough to sustain stocks at this level or are we going to see them creep gradually lower.

I'm not looking for a big move with the news vacuum, but I think we are definitely looking at a lack of drivers to take the stock market up from here.