• Fed price lower, FOMC dot-plot, Powell feedback might be in focus this week.
• Micron presents vital upside potential backed by sturdy earnings development and robust demand for its AI-related merchandise.
• Nike faces mounting challenges, with declining revenues, a cautious outlook, and comfortable shopper demand suggesting additional draw back for its inventory worth.
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U.S. shares closed largely decrease on Friday, with the Dow Jones Industrial Average posting its longest run of losses since 2020, as buyers priced in the potential of the Federal Reserve slicing charges extra slowly subsequent yr.
For the week, the blue-chip Dow fell 1.8%, the S&P 500 dipped about 0.6%, whereas the tech-heavy Nasdaq Composite tacked on round 0.3% to safe its fourth consecutive week of good points.
Source: Investing.com
The blockbuster week forward is anticipated to be a busy one full of a number of market-moving occasions, together with the Fed’s closing financial coverage assembly of 2024. An official assertion is due at 2:00PM ET on Wednesday. Fed chair Jerome Powell will converse at 2:30PM ET.
With a 25-basis level price lower assured, buyers will deal with the central financial institution’s steerage on rates of interest amid indications Powell may sign a pause in coverage easing.
Meanwhile, on the financial calendar, most necessary might be Tuesday’s U.S. retail gross sales report, which is able to shed additional mild on the well being of the financial system. The private consumption expenditures worth index studying for November, due Friday, can even be carefully watched.
Source: Investing.com
Elsewhere, on the earnings docket, there are only a handful of company outcomes due, together with Nike (NYSE:NKE), FedEx (NYSE:FDX), Micron Technology (NASDAQ:MU), Lennar (NYSE:LEN), General Mills (NYSE:GIS), and Carnival (NYSE:CCL) as Wall Street’s reporting season attracts to an in depth.
Regardless of which path the market goes, beneath I spotlight one inventory prone to be in demand and one other which may see recent draw back. Remember although, my timeframe is simply for the week forward, Monday, December 16 – Friday, December 20.
Micron is poised for a strong week because the reminiscence chip maker gears as much as report its fiscal first-quarter outcomes on Wednesday at 4:05PM ET. A name with president and chief government officer Sanjay Mehrotra is ready for five:00PM ET.
Market members count on a large swing in MU inventory after the replace drops, in accordance with the choices market, with a attainable implied transfer of +/-11.7% in both path. Earnings have been catalysts for outsized swings in shares this yr, with MU surging practically 17% when the corporate final reported quarterly numbers in September.
Wall Street anticipates sturdy earnings pushed by sturdy demand for its High-Bandwidth Memory (HBM3E) chips, that are very important for AI and cloud computing purposes.
Adding to the bullish sentiment, 16 of the 24 analysts surveyed by InvestingPro have revised their earnings estimates upward over the previous three months.
Source: InvestingPro
Micron is seen incomes $1.77 a share, reversing a pointy year-ago lack of $0.95 per share, signaling a major restoration after a difficult interval within the reminiscence market. Revenue is forecast to soar 83.9% yearly to $8.70 billion, benefiting from gross sales of high-bandwidth reminiscence gadgets to knowledge facilities operating AI purposes.
The Boise, Idaho-based firm performs a vital function in powering developments in AI, cloud computing, and 5G connectivity with its revolutionary DRAM and NAND merchandise.
Looking forward, I consider Micron’s administration will present strong steerage for the present quarter to replicate sturdy reminiscence demand from cloud suppliers as development prospects in synthetic intelligence stay sturdy. Micron’s groundbreaking HBM3E know-how, a key enabler for AI workloads, is anticipated to be a cornerstone of its development technique.
MU inventory ended Friday’s session at $102.50. At present ranges, Micron has a market valuation of $113.7 billion. Shares, which reached an all-time excessive of $157.54 on June 18, are up 20.1% within the year-to-date.
Source: Investing.com
It ought to be famous that Micron inventory stays undervalued in accordance with the InvestingPro Fair Value mannequin and will see a rise of 8.5% to $111.22.
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In distinction, Nike, the worldwide athletic attire big, faces vital headwinds this week because it prepares to report fiscal second-quarter outcomes on Thursday at 4:15PM ET.
Despite its sturdy model recognition, the corporate is grappling with declining shopper demand for athletic put on and footwear, alongside provide chain challenges.
According to the choices market, merchants are pricing in a swing of +/-7.7% in both path for NKE inventory following the print. Notably, shares gapped down after earnings previously 4 quarters, and continued challenges counsel additional draw back.
Analysts have slashed their revenue estimates amid weakening working margins and slowing development in North America and China, two of Nike’s largest markets.
Source: InvestingPro
Nike is anticipated to submit a 37.8% drop in adjusted earnings per share to $0.64, with income projected to say no by 9.7% from the year-ago interval to $12.1 billion.
The sneaker big has confronted mounting challenges in current quarters, combating weakening demand for athletic footwear and attire amid a softening macroeconomic setting.
The focus might be on newly reappointed CEO Elliott Hill’s plans for a turnaround after the corporate pivoted to a direct-to-consumer mannequin, which has struggled to offset declining wholesale revenues.
NKE inventory – which fell to a 2024 low of $70.75 on August 5 – closed at $77.25 on Friday. At its present valuation, the Beaverton, Oregon-based sportswear retailer has a market cap of $115 billion. Shares are down 28.8% within the year-to-date.
Source: Investing.com
It ought to be famous that Nike has a beneath common InvestingPro ‘Financial Health’ rating of two.4 out of 5.0 as a consequence of ongoing issues over weakening gross revenue margins and spotty gross sales development.
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Disclosure: At the time of writing, I’m lengthy on the S&P 500, and the Nasdaq 100 through the SPDR® S&P 500 ETF (SPY), and the Invesco QQQ Trust ETF (QQQ). I’m additionally lengthy on the Invesco Top QQQ ETF (QBIG), Invesco S&P 500 Equal Weight ETF (RSP), and VanEck Vectors Semiconductor ETF (SMH).
I repeatedly rebalance my portfolio of particular person shares and ETFs based mostly on ongoing threat evaluation of each the macroeconomic setting and corporations’ financials.
The views mentioned on this article are solely the opinion of the creator and shouldn’t be taken as funding recommendation.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for extra inventory market evaluation and perception.
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