U.S. investors to keep eye on Greece as crisis worsens

U.S. investors are expected to keep an eye on the Greek debt drama next week amid reports that Greece’s coffers are so depleted that its banks may not have enough money to open for business on Monday.

“With the situation in Greece once again at the make or break point, there is some degree of nervousness,” said Scott Brown, chief economist at Raymond James.

 Eurozone leaders have convened a meeting for Monday where they will again attempt to craft a bailout package for Greece in what some see as a last-ditch effort to stave off bankruptcy.

The summit comes after Greece and its creditors failed to narrow their positions last week on reforms that lenders are demanding in exchange for emergency funds.

 Unless Greece can reach some sort of a deal soon, the country may not be able to meet its 1.6 billion euro ($1.81 billion) payment to the International Monetary Fund by June 30, a week from Monday.

 European Central Bank Executive Board member Benoît Coeuré last week reportedly expressed misgivings about whether the Greek banking system has sufficient cash, as reports emerged that more than €3 billion ($3.4 billion) exited from Greek banks.

 “If there is a run on the banks, it will be a big issue for the market,” said Brown. Lingering uncertainties over Greece could unexpectedly boost the U.S. markets in the long term—particularly the bond market—as investors seek haven assets.

 “The search for perceived safety may attract more global savings to U.S. Treasury securities and persuade the Federal Reserve to postpone its rate hikes until 2016,” said Paul Christopher, head of international strategy at Wells Fargo Investment Institute.

 The yield on the 10-year Treasury TMUBMUSD10Y, -3.29% fell 10 basis points to 2.26% this week while the two-year yield also dropped 10 basis points to 0.62%, according to data from Tradeweb. The S&P 500 SPX, -0.53% posted weekly gains of 0.8% to 2,109.94 and the Dow Jones Industrial Average DJIA, -0.55% added 0.6% to 18,014.68.

The NASDAQ Composite Index COMP, -0.31% rose 1.3% to 5,117. U.S. economic data may also provide some fresh incentives to an otherwise dull market. On tap next week are existing home sales on Monday, new home sales on Tuesday and the gross domestic product growth revision for the first quarter on Wednesday.

 “The economic data reports tend to be choppy, but are unlikely to alter the overall picture of the economy,” Brown said. It will be a fairly quiet week for corporate earnings with Wall Street already looking ahead to second-quarter results.

 Earnings for the second quarter are expected to decline by 4.6% year-over-year, a first since third quarter 2012, according to John Butters, seniors earnings analyst at FactSet.

 So far, 77 S&P 500 companies have issued negative earnings-per-share outlooks and 29 have released positive forecasts.Among earnings to watch are Bed Bath & Beyond Inc. BBBY, -0.51% and Monsanto Co. MON, -1.59% on Wednesday.

Bed Bath & Beyond is projected to report first-quarter earnings of 94 cents a share on revenue of $2.75 billion, according to a consensus survey by FactSet. Monsanto is forecast to post fiscal third-quarter earnings of $2.06 a share and revenue of $4.62 billion.

 On Thursday, Micron Technology Inc. MU, +0.02% is expected to report fiscal third-quarter earnings of 58 cents a share and revenue of $3.92 billion. Nike Inc. NKE, +0.50% also slated for Thursday, is projected to post fiscal fourth-quarter earnings of 83 cents a share on revenue of $7.68 billion.

marketwatch.com