- This week’s focus will be on CPI inflation, retail sales, producer prices, and retailer profits.
- Walmart stock is a buy on strong third-quarter earnings.
- Home Depot stock has been sold off as profits have slumped and sales growth hasn’t kept pace.
- Looking for more practical trading ideas to weather the current market volatility? InvestingPro members get unique ideas and guidance to deal with any climate. learn more “
Wall Street rallied on Friday, with tech stocks posting their biggest single-day gain since May 26, amid growing doubts that the Federal Reserve will raise interest rates again.
For the week, blue chip stocks rose about 0.7%, the benchmark rose 1.3% and the Nasdaq rose 2.4%.
Investors continue to wait to see if the Fed will end its rate hikes to curb inflation, or when it will start cutting rates.
Most important on the economic calendar is the October U.S. consumer price inflation report due out on Tuesday, with headline annual CPI expected to fall to 3.3% from a 3.7% rise in September.
CPI data also includes the latest retail sales and producer price reports to help you understand the state of inflation.
As of Sunday morning, financial markets believed there was a 90% chance the Fed would leave interest rates unchanged at current levels at its December meeting, and only a 10% chance it would raise rates by a quarter of a percentage point, according to Investing.com. I’m watching.
Meanwhile, the last big week of the reporting season saw returns from several retailers including Walmart, Home Depot, Target (NYSE:), Macy’s (NYSE:), TJX Companies (NYSE:), and Ross Stores (NASDAQ:). Profit is expected. Other notable companies include Cisco (NASDAQ:), Palo Alto Networks (NASDAQ:), Alibaba (NYSE:), JD.com (NASDAQ:), Tencent Holdings (OTC:), and Xpeng (NYSE:). there is.
Regardless of which direction the market goes next week, here are the stocks that are likely to be in demand and those that are poised for new downside.
However, my time frame is: just For the next week, From Monday, November 13th to Friday, November 17th.
Brand to buy: Walmart
After closing at an all-time high on Friday, Walmart (NYSE:) stock is on track for the big retailer’s third-quarter earnings and sales to ease my expectations, thanks to strong trends in consumer demand. We expect the stock to outperform over the coming week, as we believe the stock will outperform in the coming week.
Despite a challenging environment for retailers, the outlook is positive as Walmart continues to benefit from continued shifts in frugal consumer behavior amid the current economic climate of high inflation and recession concerns. I believe that we are well positioned to provide this.
The Bentonville, Ark.-based discount retailer, which operates more than 5,000 stores across the U.S., plans to deliver an update on its third quarter Thursday before U.S. markets open at 7 a.m. ET.
Traders are pricing WMT stock to move about 4% in either direction on the news, according to options markets.
Walmart’s earnings per share are expected to be $1.52, slightly higher than the year-ago quarter’s EPS of $1.50. Analysts have raised their EPS estimates 24 times in the past 90 days, but revised them downward just four times, according to InvestingPro research.
Meanwhile, sales are expected to rise 3.7% annually to $159 billion, reflecting strong grocery sales and more shoppers signing up for the Walmart Plus membership program.
Same-store sales and e-commerce spending in the third quarter (up 6.4% and 24%, respectively, in the previous quarter) as U.S. consumers flocked to the company’s stores and website to place more orders for curbside pickup and delivery. ​​There is a high possibility that it will exceed expectations.
As such, I believe Walmart CEO Doug McMillion will provide solid guidance over the coming months as the discount retailer continues to gain market share in the grocery business.
Walmart has exceeded Wall Street revenue estimates for 14 consecutive quarters starting in the first quarter of 2020, but it has missed profit estimates only twice during that period, reflecting the strength and resilience of the company’s business. It shows.
WMT stock closed Friday’s trading at an all-time high of $166.19. With a market capitalization of $447 billion, Walmart is the world’s most valuable brick-and-mortar retailer and the 13th largest company traded on the U.S. stock exchange.
Walmart stands out from other retailers, with its stock up 17.2% since the beginning of the year. This compares to his 1% decline recorded by the SPDR® S&P Retail ETF (NYSE:), which tracks a broad, equal-weighted index of U.S. retail companies included in the S&P 500.
Inventory for sale: Home Depot
Staying in the retail sector, we think Home Depot (NYSE:) stock is set for disappointing results over the next week. A revisit to recent lows is on the horizon, as the home improvement retailer’s latest financial results are likely to reveal a significant slowdown in earnings and earnings. increased sales due to uncertain economic conditions;
Home Depot’s third-quarter financial results are expected to be released before the opening bell at 6 a.m. ET on Tuesday, but the company’s selection of building materials and construction products for both professional and do-it-yourself customers will be is likely to be hit by weaker demand for.
Market participants expect HD stock to move significantly after the print, with an expected move of around 5% in either direction, according to options markets.
Highlighting some near-term headwinds facing Home Depot amid the current climate, analysts surveyed by Investing Pro found that the company’s earnings were down 14% from its initial earnings. The company cut its EPS forecast nine times in the three months leading up to its earnings update. prediction.
Wall Street said the Atlanta, Georgia-based retail giant reported earnings per share of $3.78, down 10.9% from the year-ago quarter’s EPS of $4.24 due to higher operating expenses and the negative impact of upward cost pressures. That’s what I’m looking at.
Meanwhile, sales are expected to decline 3.2% from a year ago to $37.7 billion, reflecting lower traffic and weaker consumer spending on big-ticket items and products throughout the quarter.
U.S. same-store sales, which fell 2% in the second quarter, were again weaker than expected as Americans cut spending on home improvements and renovations in the face of high interest rates, high inflation and lingering recession concerns. Probability is high. If this were indeed the case, it would be the fourth straight quarter of declines in U.S. comparable sales.
Looking ahead, I think Home Depot executives will strike a cautious tone in their forward guidance as the housing market continues to slow and remains a key driver of spending in the home improvement sector. There is.
HD stock closed Friday’s trading at $291.59, not far from its 2023 low of $274.26 hit late last month. At its current valuation, Home Depot has a market capitalization of $291.6 billion, making it the largest home improvement retailer in the United States.
Stocks have lagged far behind the broader market’s year-to-date performance so far in 2023, declining 7.7% compared to the S&P 500’s 15% rise.
To stay on top of the latest market trends and what they mean for your trading decisions, be sure to check out InvestingPro.
Disclosure: As of this writing, I am long the S&P 500 and Nasdaq 100 via SPDR. S&P 500 ETF (SPY), and Invesco QQQ Trust ETF (QQQ). I am also long Technology Select Sector SPDR ETF (NYSE:). I regularly rebalance my portfolio of individual stocks and ETFs based on an ongoing risk assessment of both the macroeconomic environment and corporate finances. The views expressed in this article are solely those of the author and should not be taken as investment advice.