Another Fed slap-down knocked all the big benchmarks back below key levels of support, ending a four-week advance for the Dow. That put the stock market’s uptrend under pressure, with the Nasdaq just a couple clicks off its bear-market lows. It was a phenomenal week for stocks with China-exposure, and for financials with positive interest rate ties. Earnings from EV makers and shale gas and oil producers could be a positive for markets in the coming week. Disney reports its year-end results. But the massive question mark overhanging the coming week’s trade will be Tuesday’s midterm elections, with markets likely to have complex reactions to the elections’ many wide-ranging races.
Stocks To Watch: Five Stocks Near Buy Points Without This One Big Risk
Economic and Fed news are adding volatility to markets, along with a still-heavy earnings season. But Albemarle (ALB), Arista Networks (ANET), Cheniere Energy (LNG), UnitedHealth Group (UNH) and Enphase Energy (ENPH) are quality stocks that have already reported, removing a big headline risk. Arista Networks, boasting several quarters of accelerating growth, is right around buy points. Lithium giant Albemarle also flirting with a breakout. Liquefied natural gas play Cheniere and UnitedHealth are pausing after briefly moving into buy zones. ENPH is forging a handle in a new base after booming earnings.
Economic Calendar: CPI, IBD/TIPP Consumer Optimism
The consumer price index for October, out at 8:30 a.m. ET on Thursday, will be the next big data point investors look to that might have a prayer of toning down Fed hawkishness. Forward-looking measures like rent, which accounts for 31% of the CPI, are looking better. But that will take months to show up in the CPI. Economists are predicting an overall 0.7% monthly rise in the CPI, up from 0.4% in September. That would bring the annual inflation rate down to 8% from 8.2%. The core CPI, excluding food and energy, is seen moderating to a 0.5% monthly increase from 0.6% in September. The core inflation rate is expected to dip to 6.5% from 6.6%, which was the largest since 1982.
The IBD/TIPP Economic Optimism Index, out Tuesday at 10 a.m., will offer an early-month read on consumer confidence. Last month’s report showed 61% of adults think the U.S. is in recession, while the share worried about job loss in the household jumped to 38% from 34% in September and 31% in August.
Stock Market Perspective: Boeing, Goldman Prop Dow
The stock market uptrend got doused with selling Wednesday after the Fed indicated the pace of rate hikes may slow, but the peak in rates could be higher than previously thought. Indexes plunged and concluded the week with losses. The Nasdaq met resistance around its 10-week moving average. Gains from the Oct. 21 follow-through are gone, and the Nasdaq also undercut that day’s low. The Nasdaq is falling toward the 10,000 level, which is near the 2022 low. A break below those levels could signal further declines. The S&P 500 spent a few days above its 50-day line but is now back below it. Continued resistance around that level also suggests the stock market has more downside to go. For now, the Dow looks strongest among the big benchmarks. Boeing and Goldman Sachs turned in the week’s best two blue chip performances, up more than 11% and nearly 5%, respectively.
EV Makers: Rivian, Lucid Expected To Narrow Losses
Two prominent new U.S. EV stocks are expected to report narrowing losses for the third quarter while recession fears grow and supply disruptions slowly ease. Late Tuesday, Lucid (LCID) is seen losing 31 cents per share on revenue of $209.4 million. Late Wednesday, Rivian (RIVN), backed by Ford (F) and Amazon (AMZN), is likely to sharply narrow net loss per share to $1.79 on revenue of $550.3 million. But early Thursday, China’s Nio (NIO) is expected to lose 16 cents a share, widening from a six-cent loss a year ago. Revenue for the Chinese startup is seen growing 17% to $1.794 billion after the introduction of new luxury models. China continues its “zero-Covid” policy for now amid fresh outbreaks, weighing on Nio’ suppliers, though recent reports suggest that policy could lift.
S&P 500 Earnings: Oil And Natural Gas Pitch In, For Now
FactSet reports that the energy sector has been driving S&P 500 earnings so far in the third quarter. With energy stocks, aggregate S&P 500 earnings are up 2.2%. Minus energy, earnings are down 5.1%. Second-quarter earnings, minus energy, were also lower. For the year, minus energy, analyst project a collective 0.9% decline in earnings. The consensus projection including earnings calls for a 6.1% gain. The positive trend is expected to continue for energy for two more quarters. That is projected to turn in Q2 of 2023, with energy becoming a negative, rather than a positive, for earnings.
The Oil Patch: Top Shale Plays In Buy Ranges
More shale producers will be reporting next week, including the Warren Buffett-backed Occidental Petroleum (OXY). Diamondback Energy (FANG) and Viper Energy (VNOM) begin the week announcing Q3 earnings after the stock market closes Monday Analysts expect Diamondback Energy earnings to increase nearly 120% to $6.45 per share while sales are predicted to edge up 26% to $2.4 billion. The Street sees Viper Energy earning 39 cents per share, a 86% gain year-over-year. Revenue is forecast to advance 67% to $214 million. Occidental along with Northern Oil And Gas (NOG) then report after the close Tuesday. OXY EPS is forecast to be $2.48, up 185% compared to last year. Sales for the Houston-based company are expected to grow 32% to $9 billion. Wall Street predicts NOG earnings increasing 108% to $1.75 per share on sales of $380 million, up 46% compared to Q3 2021.
Dow Earnings: House Of Mouse Wraps Fiscal ’22
Walt Disney (DIS) reports its fourth quarter and full year results Thursday afternoon. The entertainment giant’s earnings are expected to jump 48% to 55 cents per share while revenue grows nearly 15% to $21.3 billion. Disney’s earnings have steadily improved over the last six quarters. Meanwhile, DIS stock tumbled roughly 44% over the past year as it reclaims losses from the coronavirus pandemic. Analysts will closely watch the number of Disney+ subscribers, after Disney lowered its forecast for 2024, introduced ad tiers and hiked the price in the third quarter. While its theme parks could face more headwinds as China is instituting another round of lockdowns.
Keeping An Eye On Cannabis: Cronos, Aurora, Canopy Report
Weed stocks have fallen out of favor but they rose higher last week on reports that Congress is “very close” to passing a marijuana banking and expungements bill. Cronos Group (CRON) popped 17%, Aurora Cannabis (ACB) gained 16% and Canopy Growth (CGC) rallied 32% ahead of earnings next week. Cronos is expected to report a loss of 8 cents per share Monday morning, compared to earnings of 27 cents per share last year. While revenue is seen jumping 33% to $34.6 million. On Wednesday, Canopy’s losses are predicted to increase to 20 cents per share from a loss of 2 cents, on a 20% drop in sales to $85.5 million. Analysts forecast Aurora’s losses to widen to 13 cents per share from 6 cents a year ago, while revenue slides 12% to $52.6 million for its Thursday results.
Stock Market Earnings
SolarEdge Technologies (SEDG) reports third-quarter results late Monday. The consensus is for $1.47 a share, up 53%, on revenue of $827 million, up 57%.
BioNTech (BNTX) is on deck to report its third-quarter earnings early Monday. Analysts polled by FactSet expect BioNTech to earn $3.19 per share, minus some items, on $2.04 billion in sales. Earnings would tumble 78% as sales fall 71%.
Palantir (PLTR) reports Q3 earnings before the market open on Nov. 7. Analysts expect the enterprise software maker to report EPS of 2 cents vs. a 4-cent profit a year earlier. Analysts estimate revenue of $474.7 million, up 21%.
Take-Two Interactive Software (TTWO) will post its fiscal second-quarter results late Monday. Analysts expect the video game publisher to earn $1.37 a share, down 16% year over year, on sales of $1.55 billion, up 58%.
Sanmina (SANM) will deliver its fiscal fourth-quarter results late Monday. Wall Street is looking for the electronics contract manufacturer to earn $1.33 a share, up 40%, on sales of $2.01 billion, up 22%. Sanmina stock broke out of a cup base on Oct. 18.
Haemonetics (HAE) is scheduled to report its fiscal second-quarter earnings early Monday. The Street is calling for the blood and plasma services provider to earn an adjusted 50 cents a share on $269 million in sales, up a respective 17% and 12%.
Alpha Metallurgical Resources (AMR) reports third-quarter earnings early Monday. The coal producer, which formerly went by Contura Energy, is expected to grow 280% to $16.81 per share. Wall Street forecasts revenue increasing 34% to $862 million. A six-week advance has the stock just below a buy point in a five-month consolidation.
GlobalFoundries (GFS) will release its third-quarter results early Tuesday. Analysts predict the contract chipmaker will earn 62 cents a share, up 786%, on sales of $2.05 billion, up 21%.
Affirm Holdings (AFRM) reports fiscal Q1 earnings after the stock market close on Nov. 8. Analysts expect the consumer financing provider to report an 84-cent loss, narrowing from a $1.13 loss a year earlier. Analysts estimate revenue of $360 million, up 33%.
DoubleVerify (DV) reports Q3 earnings late Nov. 8. Analysts expect the provider digital media measurement and data analytics tools to report 12-cent profit on revenue of $109.2 million. A year earlier the company reported adjusted EPS of 5 cents on revenue of $83.1 million.
D.R. Horton (DHI) reports its fiscal Q4 and, while the real estate industry may well be in a recession, analysts project a 37% earnings gain and a 22% revenue gain. That is below the average 57% earnings gain over the past four quarters, although just a shade under the 22.8% sales growth average. New orders, backlog and average prices will be under the microscope. The stock is back above support in a 12-week bottoming base.
New Fortress Energy (NFE) announces third-quarter financials Tuesday before the market opens. The New York-based liquefied natural gas business is predicted to see EPS of 74 cents, up from a loss of 5 cents a year ago. Analysts expect sales to grow 203% to $569 million.
Axon Enterprise (AXON) will report Q3 earnings after the stock market closes Tuesday. Analysts believe the taser and self-defense weapon manufacturer will see earnings fall 58% to 49 cents per share. Revenue is forecast to edge up 21% to $280 million. The stock is extended and hitting new highs after an October breakout.
Catalyst Pharmaceuticals (CPRX) will report its third-quarter earnings late Wednesday. Then, analysts expect the biotech company to report adjusted profit of 19 cents a share and $53.7 million in sales. Earnings would surge 36% as sales rise almost 48%.
Genpact (G) is likely to grow EPS 5% to 69 cents. Revenue is seen rising 7% to $1.085 billion. Genpact stock has formed a cup-with-handle base with a 48.69 buy point.
Excelerate Energy (EE) reports third-quarter earnings after the stock market closes Wednesday. The Texas-based LNG shipper is expected to earn 21 cents per share on $492 million in revenue. The company, which was founded in 2003, went public in April 2022.
Trade Desk (TTD) reports Q3 earnings on Nov. 9. Analysts project EPS of 23 cents, up 28% from a year earlier. Analysts estimate revenue growth of 36% to $386.1 million.
Late Wednesday, Wynn Resorts (WYNN) should narrow net loss per share to $1.14 with revenue seen falling 12% to $871.2 million. Wynn stock rallied 20% in the past week, on speculation that China could be considering easing its zero-Covid restrictions.
Dillard’s (DDS) is basing ahead of earnings, but is expected to take a hit for its third-quarter results. Analysts see the department store chain’s earnings tumbling 40% to $5.85 per share while revenue slips 2% to $1.48 billion.
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