Four days of continuous selling in the stock market sent the Dow Jones Industrial Average below 30,000, and to its lowest level since the third quarter of 2020. The Nasdaq and S&P 500 have stalled from key levels, posing a critical challenge in the last week from september. Tesla’s AI Day and Nike earnings are both major events. Another round of inflation data wraps up the week on Friday, making the last trading day in September a wildcard session.
Stocks to watch: Five stocks of a sick market
The stock market correction intensified, with major indexes at or near their lowest levels in June. It’s time to research relative strength and explore the next potential winners. Medical stocks stand out, somewhat insulated from economic concerns. Eli Lilly (LLY), Vertex Pharmaceuticals (VRTX), Neurobiological Sciences (NBIX), McKesson (MCK) and humana (HUM) all show relative strength, although no action can be taken at the moment. They all have clear bases except for Humana, who recently topped a short hold before falling back a bit.
Economic calendar: Another dose of inflation data
Economic data next week will feature an August update of the Fed’s preferred inflation measure, the PCE price index, released Friday at 8:30 a.m. ET. The core PCE price index, excluding food and energy, is expected to accelerate to a 4.8% annual gain. The hawkish forecast released on Wednesday shows the Fed’s key interest rate rising to 4.6% in 2023. The outlook appears to be that rate cuts won’t be on the table until core PCE inflation drops to 3% or less, which is Not expected until 2024.
The Federal Reserve expects the key interest rate to peak at 4.6%; Dow Jones Slices
PCE inflation figures are being reported with the Commerce Department’s personal income and spending data, which will show how spending on broad-based goods and services is going in the third quarter amid lower gas prices. At the moment, the Atlanta Federal Reserve’s now-gross domestic product tracker points to a 0.3% growth rate for the US economy in the third quarter.
On Thursday at 8:30, we will get the third update of the second-quarter GDP, which the government earlier estimated to drop by 0.6%, after the first-quarter drop of 1.6%. With the housing sector reversal, the economy is more inclined to invest in business equipment. The Durable Goods Orders report on Tuesday at 8:30 will show the latest trend.
Stock Market Perspective: Will June Lows Hold?
The stock market correction has deepened, with the index losing nearly 5%-6% last week. The Dow Jones Industrial Average has fallen to its lowest level since November 2020. The Nasdaq and S&P 500 are now testing their June lows, when a computation of some kind could occur. A break below these levels would be another bearish signal for the stock market. The Innovator IBD 50 ETF, which tracks the IBD signature index, cut its 2020 lows and is at its lowest point since December 2016. The fund is down more than 11% for the week as the out-of-the-box energy stocks sold off en masse. Many broke below support levels or distorted their bases with the recent sell-off. To be sure, sell signals appear in multiple sectors. Many healthcare leaders that have gone out of business have also been sold, leaving little to be seen.
Blue Chips: Nike Earnings
nike (NKE) is undermining support and trading is at its lowest levels since the third quarter of 2020 as the company prepares to report its first-quarter financial earnings on Thursday afternoon. Analysts expect the sportswear giant’s earnings to fall by 20%. Revenue target increased 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 its June fourth quarter report, the company’s revenue from China fell 19%. But Nike has made great strides in its digital and direct-to-consumer sales channels. Nike’s forecast revenue for the first quarter will be flat to a bit higher, just below analysts’ goals. It expects fiscal year 2023 revenue to rise in low double digits.
Stock market buybacks down in the second quarter, sort of
apple (AAPL) And the father of Google-the alphabet (The Google) All US companies led in share buybacks during the second quarter, though total buybacks were down nearly 22% from the previous quarter, according to the S&P Dow Jones Indexes. Overall, the S&P 500 repurchases in the second quarter were $219.6 billion, down 21.8% from the first-quarter record of $281 billion. IT companies continued to lead in buybacks. Repurchases by financial firms fell 61% to $21.2 billion. Healthcare buybacks fell 58% to $17.2 billion. Compared to the same period a year earlier, the second quarter in 2021, buybacks increased by 10%. Apple repurchased $24.56 billion of its stock, down about 4% from the previous year. Alphabet repurchased $15.19 billion of Google stock, an increase of about 19% over the previous year.
Tesla AI Day
TeslaTSLA’s annual Artificial Intelligence Day will showcase the latest technologies for the global EV leader. The event will take place on September 30, including a live broadcast on Tesla’s website and YouTube. Optimus, the human-like robot, is likely to top this year’s event. Tesla CEO Elon Musk claimed that Optimus, also known as the Tesla Robot, eliminates “dangerous, repetitive and boring tasks”. It could revolutionize factories and the service industry. Investors can also learn more about Tesla’s advancements in self-driving technology, the Cybertruck and Supercharger V4.
Measuring analysts’ optimism in the fourth quarter
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% selling ratings, and around 39% pending ratings. The percentage of buy ratings is below the 10-year average, down from 57.4% in February. Prior to that peak, the last time the percentage of month-end buy ratings exceeded 55% was in September 2011. Ratings are more optimistic (over 62% purchases) in the energy, IT and real estate sectors. Consumer goods and utilities have the lowest percentages of purchase ratings.
stock market profits
Jbeil JBL Corporation will release its fourth-quarter financial results early Tuesday. Analysts expect the contracted electronics manufacturer to earn $2.15 per share, up 49% year over year, on sales of $8.39 billion, up 13%.
Cal Men’s Food (CALM) announces first-quarter results Tuesday after the stock market closes. Wall Street expects earnings to increase 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.
Thor Industries (THO) reports fourth-quarter earnings on Wednesday morning. Analysts expect earnings per share to fall 7% to $3.82 per share while revenue is expected to grow 3% to $3.7 billion. Wall Street expects the RV and emergency vehicle manufacturer to earn $19.35 per share on sales of $16.2 billion for the full year.
centas (CTAS) announces financial statements for the first quarter of 2023 on Wednesday before stock market action. Earnings are expected to rise 0.6% to $3.13 per share for the provider of corporate clothing and business services. Revenue is expected to grow 9% to $2.1 billion. Cintas will generate record full-year revenue in 2022.
early wednesday, Paychex (PAYX) 9% EPS gain to 97 cents should see revenue growth 9% to $1.182 billion.
Jefferies Finance (JEF) is settling ahead of its earnings report on Thursday afternoon. Wall Street expects adjusted earnings to fall 38% to 93 cents a share. Revenue is expected to decline nearly 30% to $1.36 billion.
micron technology (MU) will announce its fourth-quarter financial results late Thursday. Wall Street expects the memory chip maker to earn $1.41 a share, down 42% year-over-year, on sales of $6.82 billion, down 18%.
Early Thursday, the last meme stock bed bath behind (BBBY) likely lost $1.80 a share to earnings per share of four cents last year. Revenue is expected to decline 27% to $1.447 billion.
Also early Thursday, a used car retailer Carmax (KMX) is expected to reveal a 17% decline in EPS to $1.43 despite an 8% increase in sales to $8.614 billion.
Worthington Industries (WOR) announces first-quarter 2023 earnings before the stock market opens Thursday. Analysts expect the industrial manufacturing company to earn $1.63 per share, down 34% year over year. Wall Street expects revenue growth of 11% to $1.3 billion.
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