Blog : Penny Stock Week: Waiting for FOMC, Jobs Report

by Ed Zwirn on July 29th, 2013

Stock markets around the world opened on the downside Monday morning, as penny stock investors awaited a packed schedule of economic news releases and the latest Fed meeting.

This follows a week which saw the market for everything from penny stocks to blue chips trade sideways, with the Dow Jones Industrial Average closing Friday at 15,558.83, up about 0.1% from the prior week's 15,543.74, to eke out its fifth consecutive weekly gain.

The performance of other indices was mixed, with the NASDAQ up 2.4% and the penny stock-rich Russell 2000 losing 0.1%, reversing the recent trend which has seen penny stocks and other small caps outperform.

Penny stock investors were treated last week to more evidence of a relatively strong U.S. economic performance:

--Monday morning saw the release of a report showing a lower-than-expected 5.08 million existing home sales number for June, off slightly from the adjusted 5.14 million posted for May.

--Wednesday's new home sales release, which had been expected to weigh in at 483,000 for June, came in at a much higher than expected 497,000, a pickup from May's adjusted 459,000.

--Thursday saw the release of a report showing a higher-than-expected 4.2% rise in durable goods orders for June, driven by transportation, down from an adjusted 5.2% May increase. Backing out transportation, the June figure stayed flat, versus an adjusted 1% May rise.

Economic releases worthy of a penny stock picker's attention this week include:

--Monday's pending home sales report is expected to show a 1.7% June drop, down from May's 6.7% increase.

--Wednesday morning's advance report on Q2 GDP is expected to show a 1.1% increase, a slowdown from Q1's 1.8%.

--Wednesday afternoon will see the Federal Reserve's Open Markets Committee's two-day meeting conclude. The announcement issued by the Fed will be closely watched for any clues as to the direction of monetary policy going forward.

--Thursday morning's construction spending report is expected to show a 0.2% June increase, down from the prior month's 0.5% rise.

--Later that day, the report on July auto sales will be watched for any change from May's 5.7 million figure, as will the report on truck sales, which came to 6.8 million the last time around.

--The headline grabber this week will be the jobs numbers to be released on Friday. The consensus calls for 175,000 non-farm jobs added to the economy for July, down from June's 195,000. The unemployment rate is expected to dip slightly, from June's 7.6% to 7.5% for July.