Stock Market Investment Action Plan: Jackson Hole, Nvidia, Toll Brothers, Chip Stocks

The Nasdaq broke the short-term 10-day moving average for the first time since late July, while the Dow index broke support at the 200-day level. But the Nasdaq’s first weekly decline since mid-July is just a minor red flag for the stock market as it ended the week just over 1% after testing support on its 21-day exponential moving average. With chipmakers recovering ground, Nvidia’s report is likely to be a highlight of the week. Toll Brothers housing data and earnings will also be closely monitored, ahead of Friday’s final with a speech by Jerome Powell in Jackson Hole.




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Stocks to watch: 5 chip stocks near buying points

The stock market pause over the past week gave some recovering chip stocks a chance to complete the handles after moving up the right side of the bases.

On semiconductor (ON), better known as Onsemi, is in the buy range and gets a boost from rival wolfspeed (WOLF) last week as EV and other auto markets do well. chip makers Monolithic Power (MPWR), Axcelis Technologies (ACLS) and Analog Devices (ADI) are still within handles, while chip foundry GlobalFoundries (GFS) just cut a new handle. A market pullback can make for longer handles to catch up with moving averages, but there is always the danger that these handles will start to break down.

Fed Watch: The Message From Jackson Hole

Fed chief Jerome Powell headlines the week’s economic news with his 10 a.m. Friday speech at the central bank’s annual Jackson Hole symposium. The big question: will Powell try to undo the calm impression he made at his July 27 press conference that sparked a stock market rally? Perhaps the biggest downer, in the eyes of investors, would be if Powell talks about the lessons learned from the Fed’s failures in the 1970s. The reversal of interest rate hikes too early when unemployment started to rise led to a rapid and sustained rebound in inflation. But don’t expect doom and gloom. Powell is likely to stick to his view that the Fed can bring about a relatively soft landing for the US economy. Powell probably won’t answer the question of how big a rate hike on September 21 will be. The Fed will not pre-empt, waiting for up-to-date jobs and inflation data.

Stock market calendar: GDP update, consumer spending, home sales

Economic data for the coming week will include the second estimate of GDP for the second quarter at 8:30 a.m. ET on Thursday. The initial estimate that GDP fell 0.9% after the 1.6% decline in the first quarter gave an unofficial recession label to the US economy. Still, most economists expect the third quarter to show positive growth as the decline in gas prices revives spending in inflation-adjusted terms. Friday’s personal income and expense report, which comes out at 8:30 a.m., provides an early look at consumption in the third quarter. The report will also update the Fed’s preferred inflation index, which shows some key differences from the consumer price index and tends to run slightly lower. Also on tap, more bleak housing news. New home sales report will be out Tuesday at 10 a.m. Awaiting sales of existing homes in the run-up to the lingering closing period, to follow Wednesday at 10 a.m. With the housing sector reversed, the economy is picking up more on investment in business equipment. Durable goods orders reported at 8:30 a.m. Wednesday show the latest trend.

Retail earnings: trickle-down inventories

Department stores Macy’s (M) and Nordstrom (JWN) Reports Quarterly Earnings Tuesday, With Dollar Store Results Dollar General (DG) and money tree (DLTR), which appears on Thursday. The results come as higher food and gas prices make spending on clothes more difficult. Wall Street expects Macy’s to earn 86 cents a share, down 33%, while revenue is down 3% to $5.49 billion. Analysts expected Nordstrom’s profit to rise 63% to 80 cents, on revenues up 8% to $3.963 billion. They saw Dollar General earnings per share rise 9% to $2.94, while revenue rose 9% to $9.393 billion. Dollar Tree estimates were for earnings per share of $1.59 and revenue of $6.797 billion.

Real estate market: the housing depression is coming

Luxury home builder Toll Brothers (TOL) will complete the latest major homebuilder reports on Tuesday. The report comes just a week after the National Association of Home Builders officially called a housing recession, following the release of data in August showing builders’ confidence for single-family homes is below the critical breaking point of 50. Buyer traffic fell to its worst level since April 2014, save for a brief decline in early 2020. Forecasts put Toll Brothers earnings per share at $2.30, up 23%. The revenue target is $2.51 billion, an increase of 11.4%. Pricing and cancellations will be key, with NAHB reporting that 20% of builders cut prices in the second quarter to avoid cancellations.

China Economy: A Look at Retail, Consumer Spending

JD.com (JD) will report quarterly results early Tuesday, which should provide insight into China’s retail markets and consumer confidence after disappointing official July sales. Analysts expect JD.com to report adjusted income of 41 cents per share, a 10% decline from the same period last year on revenue of $38.7 billion, a 1% decline and a sharp slowdown from its consistent double-digit growth in recent years. It would be JD’s first quarterly decline. JD mainly competes against Alibaba (BABA), with the two being the largest e-commerce companies in China. Alibaba reported earnings that beat expectations early this month, while business conditions improved in June. Like JD, however, Alibaba also posted its first quarterly revenue decline. JD and Alibaba have been hit by sporadic Covid shutdowns in China, a tight regulatory condition and weaker-than-expected macroeconomic conditions. Retail sales in China rose 2.7% in July from a year earlier, but below the 5% growth forecast by Reuters. But online sales of physical goods rose 10% year-on-year in July, faster than in June, according to CNBC calculations from official data..


Notes about the profit on the stock market


Monday:

Palo Alto Networks (PANW) reports fourth quarter fiscal results at the end of August 22. The cybersecurity firm’s earnings per share are expected to rise 42% to $2.20. Revenue will rise 26% to $1.54 billion, analysts predict. Palo Alto’s 2023 fiscal guidelines will be key. Analysts estimate earnings per share at $9.23, an increase of about 37%.

Nordson (NDSN) formed a 40-week cup base ahead of Monday afternoon’s earnings report. Analysts expect earnings per share of less than 1% and revenue growth to $2.44 and $651 million, respectively.

Tuesday:

xpeng (XPEV) will publish the results for the second quarter on Tuesday before the stock market opens. Analysts expect a loss of 32 cents a share and an 86% increase in revenue to $1 billion for the China-based electric vehicle manufacturer.

Advanced Auto Parts (AAP) released its second-quarter financial results on Wednesday morning. According to FactSet, the supplier of aftermarket products for the automotive industry is expected to grow revenues by 10% to $3.75 per share. Wall Street expects second-quarter revenue to rise 4% to $2.7 billion.

intuitive (INTU) reports its fourth quarter fiscal results at the end of August 23. Analysts expect the financial software company’s profit to fall 48% to $1.03, while revenue will fall 8% to $2.34 billion. Guidance for fiscal 2023 will be critical amid concerns about a slowing economy and the impact on small and medium-sized businesses. The company is organizing an investor day on September 29.

heico (HEI) broke out of its 79-day double bottom base on July 29. HEI stocks beat resistance from the April high, trading just above the 10-day moving average as of Friday. The defense company will report its quarterly results on August 29. Analysts expect earnings growth of 16% to 65 cents per share and revenue growth of 17% to $555 million for the quarter.

Medtronic (MDT) will report its fiscal first quarter results early Tuesday. Analysts polled by FactSet expect Medtronic’s adjusted earnings to fall about 21% to $1.12 per share. They are also calling for a 10% drop in revenue to $7.22 billion. Analysts are likely to focus on the sales impact from ongoing lockdowns in China and whether exchange rates will have an effect on guidance.

Wednesday:

Nvidia (NVDA) reports Q2 results after Wednesday’s stock market close. Analysts are forecasting earnings per share of 49 cents, down 53% from a year earlier. The chipmaker announced some financial data, including $6.7 billion in revenue. The company had generated $8.1 billion in revenue. Video game machine sales fell 44% in the quarter. Data center sales fell by 2%.

Sales team (CRM) reports Q2 results late Wednesday. The business software maker’s earnings are expected to fall 30% to $1.03 per share. Revenue will increase 22% to $7.7 billion, including the acquisition of analyst project Slack Technologies.

Box (BOX), which recently broke out of a cup-with-handle basis, reports second-quarter results Wednesday morning. The cloud business collaboration and content management software company is expected to report profits of 27 cents, up 29% from the same period last year, on revenue of $245.3 million, up 14%. Box stock is up about 7%% since the August 1 breakout.

Thursday:

Marvell technology‘s (MRVL) second quarter results are on the deck for after the closing Thursday. Analysts forecast earnings growth of 65% to 56 cents a share, on an adjusted basis. They estimate revenue of $1.52 billion, up 41%.

Ulta Beauty (ULTA), a beauty retailer, reported its second-quarter results on Thursday. Wall Street expects earnings per share of $4.90, an increase of 8%, on revenue of $2.193 billion, a gain of 11%. Shares are in a base.

Business day (WDAY) reports Q2 results after the stock market closing bell on Thursday. The enterprise software maker is expected to report earnings per share of 79 cents, down 36% from a year earlier. Revenue is expected to grow 20% to $1.52 billion.

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