RPT-Wall St Week Ahead: Earnings, money flows to push stocks higher

NEW YORK, Jan 20 (Reuters) - With earnings momentum on the

rise, the S&P 500 seems to have few hurdles ahead as it

continues to power forward, its all-time high a not-so-distant

goal.

The U.S. equity benchmark closed last week at a new

five-year high on strong housing and labor market data and a

string of earnings that beat lowered expectations.

Sector indexes in transportation, banks and

housing last week hit historic or multiyear highs as

well.

Michael Yoshikami, chief executive at Destination Wealth

Management in Walnut Creek, California, said the key earnings to

watch for this week will come from cyclical companies. United

Technologies reports on Wednesday while Honeywell

is due to report Friday.

"Those kind of numbers will tell you the trajectory the

economy is taking," Yoshikami said.

Major technology companies will also report this week, but

the bar for the sector has been lowered even further.

Chipmakers like Advanced Micro Devices, which is due

Tuesday, are expected to underperform as PC sales shrink. AMD

shares fell more than 10 percent Friday after disappointing

results from its larger competitor, Intel. Still, a

chipmaker sector index posted its highest weekly close

since last April.

Following a recent underperformance, an upside surprise from

Apple on Wednesday could trigger a return to the stock

from many investors who had abandoned ship.

Other major companies reporting this week include Google

, IBM, Johnson & Johnson and DuPont

on Tuesday, Microsoft and 3M on Thursday

and Procter & Gamble on Friday.

CASH POURING IN, HOUSING DATA COULD HELP

Perhaps the strongest support for equities will come from

the flow of cash from fixed income funds to stocks.

The recent piling into stock funds - $11.3 billion in the

past two weeks, the most since 2000 - indicates a riskier

approach to investing from retail investors looking for yield.

"From a yield perspective, a lot of stocks still yield a

great deal of money and so it is very easy to see why money is

pouring into the stock market," said Stephen Massocca, managing

director at Wedbush Morgan in San Francisco.

"You are just not going to see people put a lot of money to

work in a 10-year Treasury that yields 1.8 percent."

Housing stocks, already at a 5-1/2 year high, could

get an additional bump this week as investors eye data expected

to support the market's perception that housing is the sluggish

U.S. economy's bright spot.

Home resales are expected to have risen 0.6 percent in

December, data is expected to show on Tuesday. Pending home

sales contracts, which lead actual sales by a month or two, hit

a 2-1/2 year high in November.

The new home sales report on Friday is expected to show a

2.1 percent increase.

The federal debt ceiling negotiations, a nagging worry for

investors, seemed to be stuck on the back burner after House

Republicans signaled they might support a short-term extension.

Equity markets, which tumbled in 2011 after the last round

of talks pushed the United States close to a default, seem not

to care much this time around.

The CBOE volatility index, a gauge of market anxiety,

closed Friday at its lowest since April 2007.

"I think the market is getting somewhat desensitized from

political drama, given this seems to be happening over and

over," said Destination Wealth Management's Yoshikami.

"It's something to keep in mind, but I don't think it's what

you want to base your investing decisions on."

Source: http://news.yahoo.com/rpt-wall-st-week-ahead-earnings-money-flows-162254323--sector.html

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