Stock Markets Action Plan: Nike Earnings, Tesla AI Day

Four days of steady stock market selling brought Dow industrials below 30,000, to their lowest level since Q3 2020. The Nasdaq and S&P 500 were locked out of key levels, posing a critical challenge en route to the latter. week of September. Tesla’s AI Day and Nike earnings are both significant events. And another round of inflation data closes out the week on Friday, turning the last trading day of September into a wildcard session.




X



Stocks to watch: five stocks for a sick market

The stock market correction has intensified, with major indices at or near their June lows. It’s a time to look for relative strength and scout the next potential winners. Medical supplies, somewhat isolated from economic concerns, stand out. Eli Lilly (LLY), Vertex Pharmaceuticals (VRTX), Neurocrine Life Sciences (NBIX), McKesson (MCK) and human (HUM) all show relative strength, although no action can be taken at this time. They all have a clear base, except Humana, who recently hit a short-term consolidation before retreating slightly.

Econ Calendar: Another dose of inflation data

Economic data in the coming week will include an August update of the Federal Reserve’s favorite inflation gauge, the personal spending price index, which comes out Friday at 8:30 a.m. ET. PCE’s core price index, excluding food and energy, is expected to accelerate again to an annual increase of 4.8%. Hawkish projections released on Wednesday show the Fed’s key rate rise to 4.6% in 2023. The projections seem to indicate that rate cuts will not be on the table until core PCE inflation falls to 3% or lower , which is not expected until 2024 .


Federal Reserve expects a 4.6% peak; Dow Jones Slides


The PCE inflation numbers are reported with the Commerce Department’s personal income and spending data, which will show how general spending on goods and services evolves in the third quarter amid lower gas prices. Right now, the Atlanta Fed’s GDPNow tracker only indicates a 0.3% growth rate for the US economy in the third quarter.

On Thursday at 8:30 AM, we’ll get the third update for second-quarter GDP, previously estimated by the government at 0.6%, after the 1.6% decline in the first quarter. With the housing sector in reverse, the economy relies more on investment in business equipment. Durable goods orders, which come out at 8:30 a.m. Tuesday, will show the latest trend.

Stock Market Perspective: Will June Lows Hold Up?

The stock market correction deepened, with index losses of about 5%-6% last week. The Dow Jones Industrial Average plunged to its lowest level since November 2020. The Nasdaq and S&P 500 are now testing their June lows, where some sort of settlement could take place. A breach below those levels would be another bearish sign for the stock market. The Innovator IBD 50 ETF, which tracks IBD’s signature index, undercuts the 2020 lows and is at its lowest since December 2016. The fund plunged more than 11% for a week as the energy stocks that held up sold off en masse . Many broke below the support level or their bases became distorted by the latest sell-off. Sure, sell signals are popping up across multiple industries. Several healthcare leaders who had lasted also came under the sale, leaving little worth watching.

Blue Chips: Nike Earnings

Nike (NKE) stocks are undercutting support and trading at their lowest levels since Q3 2020 as the company prepares to report its fiscal first quarter results Thursday afternoon. Analysts expect the sportswear giant’s profits to fall by 20%. The revenue target rose slightly to $12.28 billion from $12.25 billion a year ago. NKE has faced factory closures in China and Vietnam due to the coronavirus pandemic. In the June Q4 report, the company’s sales from China fell 19%. But Nike has also made great strides in its digital and direct-to-consumer sales channels. Nike’s first-quarter revenue forecast will increase only flat to slightly, which is just below analysts’ targets. It expects revenues for fiscal year 2023 to rise in the low double digits.

Stock market buybacks fell in the second quarter, sort of

Apple (AAPL) and Google parentAlphabet (GOOGL) led all US companies in share buybacks in the second quarter, although total buybacks fell nearly 22% from the previous quarter, according to S&P Dow Jones Indices. Overall, S&P 500 buybacks were $219.6 billion in the second quarter, down 21.8% from the record $281 billion in the first quarter. Information technology companies continued to lead the way in buybacks. Repurchases by financial firms fell 61% to $21.2 billion. Healthcare procurement fell 58% to $17.2 billion. Compared to a year earlier, Q2 in 2021, buybacks increased by 10%. Apple has repurchased its own shares for $24.56 billion, about 4% less than a year earlier. Alphabet has bought back $15.19 billion worth of Google shares, an increase of about 19% from a year earlier.



Tesla AI Day

Tesla‘s (TSLA) annual AI Day will showcase the latest technology from the global EV leader. The event will take place on September 30, including live streams on the Tesla website and YouTube. Optimus, the humanoid robot, will likely headline the event this year. Also known as the Tesla bot, Optimus eliminates “dangerous, repetitive and boring tasks,” claimed Tesla chief executive Elon Musk. It could revolutionize factories and the service industry. Investors can also learn more about Tesla’s advancements in self-driving technology, the Cybertruck and the Supercharger V4.

Measuring analysts’ Q4 optimism

Nearly 56% of the more than 10,000 stock ratings currently on S&P 500 stocks are buy ratings, according to FactSet. Less than 6% are sales ratings and about 39% are holding ratings. The percentage of buy ratings is below the 10-year average and below the high of 57.4% in February. Before that peak, September 2011 was the last time the buy recommendation rate rose above 55% at the end of the month. Valuations are most optimistic (more than 62% buy) for the energy, information technology and real estate sectors. Consumer goods and utilities have the lowest percentages of purchase ratings.


Income on the stock exchange


Tuesday:

jabil (JBL) will report its fiscal fourth quarter results early Tuesday. Analysts expect the contract electronics maker to earn $2.15 a share, up 49% year over year, on revenue of $8.39 billion, up 13%.

Cal-Maine Foods (CALM) will announce its first quarter results on Tuesday after the stock market closes. Wall Street is forecasting an increase in earnings from a loss of 37 cents a share last year to $2.55 a share in the first quarter of 2023. Sales are expected to grow 86% to $617 million for the national egg distributor.

Wednesday:

Thor Industries (THO) will announce its fourth quarter figures on Wednesday morning. Analysts predict earnings per share will fall 7% to $3.82 per share, while revenue is expected to grow 3% to $3.7 billion. Wall Street predicts the RV and emergency vehicle maker will earn $19.35 a share for the year on revenue of $16.2 billion.

ribbons (CTAS) reports first quarter 2023 financials Wednesday ahead of stock market action. Earnings are expected to rise 0.6% to $3.13 per share for the company uniforms and business services provider. Revenue is expected to grow 9% to $2.1 billion. Cintas will achieve record full-year sales in 2022.

early wednesday, paychex (PAYX) should see earnings per share of 9% to 97 cents on revenue growth of 9% to $1.182 billion.

Jefferies Financial (JEF) is based on Thursday afternoon’s earnings report. Wall Street predicts adjusted earnings will fall 38% to 93 cents a share. And revenue is expected to drop nearly 30% to $1.36 billion.

Thursday:

Micron technology (MU) will release its fourth quarter results at the end of Thursday. Wall Street predicts that the memory chip maker will earn $1.41 per share, down 42% year over year, on revenue of $6.82 billion, down 18%.

Early Thursday, recent meme stock Bed Bath & More (BBBY) is likely to lose $1.80 a share from earnings per share of four cents a year ago. Sales are down 27% to $1.447 billion.

Also early Thursday, used car seller AutoMax (KMX) is expected to reveal a 17% decline in earnings per share to $1.43, despite an 8% increase in revenue to $8.614 billion.

Worthington Industries (WOR) reports first quarter 2023 profit before the stock market opens on Thursday. Analysts expect the industrial manufacturing company to earn $1.63 per share, down 34% year-over-year. Wall Street forecasts revenue growth of 11% to $1.3 billion.

YOU MAY ALSO LIKE THIS:

What is CAN SLIM? If you want to find winning stocks, then know better

IBD Live: Learn and Analyze Growth Stocks with the Pros

Looking for the next big scholarship winners? Start with these 3 steps

Want more IBD insights? Subscribe to our investment podcast

Bear Market looks one more leg down; 6 Stocks That Show Strength

Leave a Comment