Stock Market Week: Nike, FedEx And Nvidia’s ‘AI Woodstock’

Mar 16, 2024
stock-market-week:-nike,-fedex-and-nvidia’s-‘ai-woodstock’

The stock market paused for a second week as earnings season continued its warm down. With the big benchmarks sitting on solid gains for the year so far, a little consolidation provides time for many leading stocks to shape bases and serve up buy points.

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The 10-week rally of NVDA stock remains unbroken ahead of Nvidia‘s (NVDA) developers’ conference on Monday. FedEx (FDX) and Nike (NKE) both report in the coming week, providing different views into consumer behavior. And the EPA announces its finalized new emission rules for autos, prescribing the arc of automotive development over the next decade.

Stocks To Watch: Five Stocks Forge A Classic Bullish Base

A number of leading stocks have forged short flat bases, a classic bullish pattern often found when a market rally has some choppy or sideways action over several weeks. Arista Networks (ANET), Ares Management (ARES), ServiceNow (NOW), HubSpot (HUBS) and Neurocrine Biosciences (NBIX) are all setting up near buy points. Software makers ServiceNow and HubSpot arguably have already flashed some early entries. All have IBD Composite Ratings of at least 95, signaling strong fundamental and technical performance.

Econ Calendar: Fed Puts Its Cards On The Table

The Federal Reserve will lay its cards on the table this week, with new economic and interest-rate projections released at 2 p.m. ET on Wednesday, along with its updated policy statement. 

Rate cuts aren’t expected to be on the table until at least June. However, the Fed will signal whether the strong job growth, hot inflation and surging stock market since its last quarterly projections issued Dec. 13 have changed the outlook for three quarter-point rate cuts this year.


This Fed Rate-Cut Surprise May Fool Everyone. The S&P 500 Should Be OK.


Fed chair Jerome Powell told Congress in early March testimony that policymakers were close to having enough confidence about inflation’s return to 2% that they could begin cutting rates. A key question is whether the Fed’s confidence was eroded by another set of hot inflation reports in recent days, along with upward revisions to January data.

Investors also will get a full serving of housing data in the coming week. The NAHB Housing Market Index, gauging builder optimism and buyer traffic, is out Monday at 10 a.m. Housing starts and building permits for February are due on Tuesday at 8:30 a.m. Existing home sales will be reported Thursday at 10 a.m.

Will Nike’s Brief Earnings Rebound End?

Nike reports third-quarter results late Thursday following the sluggish retail sales report from March 14. The Dow Jones sports apparel giant on Feb. 16 announced plans to reduce its workforce by 2%, or more than 1,600 people, as part of an effort to cut $2 billion in costs over the next three years. Meanwhile, analysts expect some near-term weakness due to soft sales trends and spotty consumer demand. Oppenheimer on Feb. 16 downgraded NKE to perform from outperform and lowered its price target to $110 from $150 seeing “no quick fix” for the retailer. Citi expects in-line results, and for promotions to remain elevated, it wrote in a Thursday research note. Any near-term weakness should be viewed as a buying opportunity, it said, and kept a buy rating on shares.

Still, Citi cut its price target on NKE to $125 from $135. FactSet analysts expect earnings to slide 3.8% to 76 cents per share after two quarters of accelerating gains. Wall Street predicts revenue declines 1% to $12.3 billion after four quarters of slowing growth.

Nvidia Stock: ‘AI Woodstock’ Starts Monday

Graphics-chip maker Nvidia will kick off its annual GTC conference for AI developers on Monday in San Jose, Calif., with a keynote speech from Chief Executive Jensen Huang. The four-day show is being called “AI Woodstock.” It’s the first in-person GTC in five years. Nvidia will tout its latest graphics processing units, including the upcoming B100, along with other computing innovations for data centers, PCs and more. Nvidia says Huang’s keynote will unveil breakthroughs in accelerated computing, generative AI and robotics. The company expects more than 300,000 people to register to attend in person or virtually for GTC 2024.

FedEx Earnings Growth Expected To Slow

Shipping heavyweight FedEx reports fiscal 2024 third-quarter earnings and revenue after the stock market closes Thursday. FedEx and rival UPS (UPS) earnings performance and outlook tend to provide on-the-ground readings of economic activity. Analysts expect FedEx EPS to grow 3% to $3.51 with sales declining 1% to $21.97 billion. On Dec. 20, 2023, FedEx forecast full 2024 earnings of $17-$18.50 per share. FDX stock is currently consolidating, working to climb back above its 200-day moving average. Meanwhile, UPS holds its “analyst day” on March 26. The package delivery giant at the end of January announced plans to reduce its workforce by 12,000 along with worse-than-expected fourth-quarter revenue and 2024 guidance well below analyst expectations.

EPA Set To Announce New Auto Rules

Environmental Protection Agency Administrator Michael Regan plans to announce the agency’s finalized rules for auto emissions through 2032 on Wednesday. Automakers have been edgy about the revised rule, a core element of the Biden Administration’s climate initiative. Expectations are for a halving of auto carbon dioxide emissions between 2027 and 2032 by aiming for electric autos to constitute more than two-thirds of all auto sales by 2032.

A Pair Of Profitable Brazilian Names To Report

A couple of Brazil’s hot stocks are due to report results Monday. StoneCo (STNE) is provides point-of-sale transaction technologies to Brazil’s economy. It has logged steady triple-digit quarterly earnings gains for the past year. FactSet projects a 107% gain for Q4, which would be its smallest increase in five quarters. Aircraft builder Embraer (ERJ) will attempt to notch a third straight quarter of earnings acceleration, with analysts targeting a 466% EPS gain. Embraer is up 26% for the year and extended from an early March breakout. StoneCo is down 5%, but up 16% from a November breakout.


Stock Market Earnings Briefs


Monday

PDD Holdings (PDD) reports fourth-quarter earnings early Wednesday. Analysts project earnings will rise 29% to $1.57 per share, according to FactSet. Sales are seen rising 91% to $11 billion. PDD, the parent company of e-commerce companies Pinduoduo in China and Temu globally, was a hot stock in 2023. But PDD shares are off 15% to start this year amid concerns about the Chinese economy and the potential for stricter regulation in the U.S.

Tuesday

HealthEquity (HQY) reports after the stock market close on Tuesday. The Utah-based manager of health savings accounts is expected to continued its run of hot double-digit earnings gains, slowing only slightly, to a targeted 51% gain. It has been mired in consolidations for years, but broke to a 20-month high in February.

Wednesday

Micron Technology (MU) will release its fiscal second-quarter results late Wednesday. Wall Street expects the memory-chip maker to lose an adjusted 26 cents a share on sales of $5.33 billion. That would mark its sixth straight quarter of losses as it navigates a cyclical downturn. But analysts polled by FactSect predict Micron will return to profitability in its fiscal Q3.

Five Below (FIVE) is trading near a 212.01 buy point for a cup-with-handle base ahead of Q4 results late Wednesday. FactSet expects earnings to increase 23% to $3.78 per share while revenue growth accelerates for the second quarter in a row, jumping 20% to $1.35 billion. 

Worthington Enterprises (WOR) reports fiscal 2024 third-quarter earnings and revenue late Wednesday. Analysts expect EPS to grow 8% to 69 cents with sales cratering 70% to $327 million. The metals manufacturing operation has averaged around 60% EPS growth over the last three quarters even as revenue skidded in Q2. WOR stock hit a new high of 67.23 on Feb. 26 but has pulled back since then, trading along its 21-day exponential moving average.

Thursday

Lululemon Athletica (LULU) reports late Thursday. Analysts expect it to deliver a 14% EPS increase to $5, year over year, on a 15% sales gain to $3.195 billion. That would mark a slowdown on both the top and bottom lines from the prior quarter for the athletic apparel retailer and Peloton (PTON) partner.

Darden Restaurants (DRI), the parent company of Olive Garden and LongHorn Steakhouse, is trading in a buy zone for a cup-with-handle base with Q3 results due early Thursday. FactSet forecasts double-digit earnings growth for the fifth consecutive quarter with a 13% increase to $2.64 per share. Analysts expect revenue increases about 9% to $3.03 billion. 

Winnebago Industries (WGO) announces 2024 second-quarter earnings and revenue early Thursday. Analysts forecast EPS sinking 53% to 88 cents with sales falling 17% to $720 million. Winnebago Industries has averaged a 48% earnings decline over the last three quarters, as the RV craze that spread during the Covid-19 pandemic has subsided.

Commercial Metals Company (CMC) reports second-quarter earnings and revenue Thursday before the stock market opens. Wall Street expects EPS to decline 48% to 75 cents with sales falling 10% to $1.81 billion. The steel manufacturing outfit has seen EPS fall in four consecutive quarters and analysts expect annual earnings declines through 2026. The stock could be seen as rebounding from its 10-week line, or below a 56.08 handle entry.

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