Week Ahead: Earnings and Europe Downgrade Fallout

Investors next week will digest Friday’s announcement by Standard and Poor’s that the ratings firm downgraded several of Europe’s largest economies, including France and Italy.

U.S. stock markets are closed on Monday to observe the Martin Luther King Jr. holiday.

Meanwhile, fourth quarter earnings season kicks into high gear with reports from such bellwether companies as Citigroup (NYSE:C), Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS).

Tech sector giants Apple (NASDAQ:AAPL), International Business Machines (NYSE:IBM), Intel (NASDAQ:INTC) and Google (NASDAQ:GOOG) are all due to report next week as well.

An initial public offering from Renewable Energy Group Inc., a producer of biodiesel fuel, will mark the first IPO of 2012. The company plans to sell 7.2 million shares on Thursday at a price range of $13 to $15. The shares will trade on the Nasdaq under the symbol REGI.

Also due next week are reports on December housing starts, due Thursday, and existing home sales, due Friday.

Housing starts jumped in November primarily in the area of multi-unit structures. The market for single family homes has been brutal for several years, leading many Americans to seek rental units. That demand is fueling the jump in new multi-unit structures.

Due Wednesday and Thursday, respectively, are government reports on the December producer price index and consumer price index. Despite rising food costs, the Federal Reserve has maintained for months that inflation is a long-term concern but not an immediate threat.

Reports on December and January factory activity are also due next week, and two regional Fed banks will report their January factory surveys.