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Investors will look to regroup next week after three straight weeks of declines for the S&P 500 Index and the Nasdaq Composite Index amid rising concerns over higher Treasury yields and inflation. The market weakness came right in front of the Federal Reserve’s Jackson Hole symposium, which will be a key focus for investors and include a speech by Jerome Powell. Seeking Alpha analyst Gary Gambino advised readers that they should not expect any big surprises to come out of the conference. “The Fed will probably restate its intent to keep interest rates high for an extended period to make sure inflation does not flare up again,” he previewed. Early in the week, global flash PMI prints, U.S. durable goods orders, and European sentiment indicators will give economists more data points to analyze. Meanwhile, on the earnings front, reports from Nvidia (NVDA) (analysis), DICK’S Sporting Goods (DKS) (analysis), and Snowflake (SNOW) (earnings breakdown) will be closely watched. On the labor front, the United Auto Workers union set a vote for next week on authorizing their leaders to call for strikes against Detroit automakers Stellantis (STLA), Ford (F), and General Motors Company (GM). Union President Shawn Fain said in a recent statement that talks are moving slowly and have yet to get to wages and other economic issues. Traders could also see the AMC Entertainment (NYSE:AMC) 1-for-10 reverse stock split and subsequent APE (NYSE:APE) unit conversion finally make it to the finish line.
Earnings spotlight: Monday, August 21 – Zoom Video (ZM) and Nordson (NDSN).
Earnings spotlight: Tuesday, August 22 – Lowe’s (LOW), DICK’S Sporting Goods (DKS), Baidu (BIDU), Medtronic (MDT), Macy’s (M), and Toll Brothers (TOL).
Earnings spotlight: Wednesday, August 23 – Nvidia (NVDA), Analog Devices (ADI), Snowflake (SNOW), Autodesk (ADSK), Splunk (SPLK), and Foot Locker (FL).
Earnings spotlight: Thursday, August 24 – Intuit (INTU), Toronto-Dominion Bank (TD), NetEase (NTES), Workday (WDAY), Ulta Beauty (ULTA), Gap (GPS), Affirm (AFRM), and Marvell Technology (MRVL).
Volatility watch: Short interest on Fisker (FSR) and Blink Charging (BLNK) are at high levels heading into their earnings reports. Options trading volume is elevated on Yellow (OTC:YELLQ) and AEye (LIDR) once again.
IPO and spinoff watch: No new IPOs are currently scheduled to price in the week ahead. Analysts could post ratings for the first time on Surf Air Mobility (NYSE:SRFM), Warrantee (NASDAQ:WRNT), ParaZero Technologies (NASDAQ:PRZO), Earlyworks (NASDAQ:ELWS), Janover (NASDAQ:JNVR), and SharkNinja (NYSE:SN) following the expiration of the quiet periods for the stocks. Instacart (ICART) could also file for its long-awaited IPO on the Nasdaq, according to reports.
Dividend watch: Companies projected to boost their quarterly dividend payouts include See Seeking Alpha’s list of Quick Dividend Stock Picks.
Jackson Hole preview: The Federal Reserve’s Economic Policy Symposium will take place in Jackson Hole, Wyoming, from August 24-26. The topic of this year’s retreat to the Tetons is “Structural Shifts in the Global Economy.” All eyes will be on how Fed officials react to the strength of the economy and potential inflation risks just a few weeks ahead of the September meeting. Federal Reserve Chairman Jerome Powell is expected to deliver an update that relies heavily on recent data, including the recent CPI numbers and core PCE inflation report. Powell is expected to highlight some of the progress made in combating inflation, but stay on script with his most recent commentary about the need to stay vigilant. UBS thinks Powell leaves enough of a hawkish edge that the door remains open to more rate hikes, even though the firm is confident he will stop well short of putting an interest rate hike on the table for September. Bank of America said Powell is likely to reiterate the Fed’s commitment to its 2% inflation target and to push back – implicitly or explicitly – against the degree of rate hikes that markets are pricing for next year. BofA said it would be surprised to see any large shift in Fed communications around the neutral rate at Jackson Hole, given that there is significant uncertainty around estimates of this rate. If the Fed were to signal expectations for a higher neutral rate, it would likely be interpreted by the market as hawkish since it implies higher overnight rates to slow the economy.
Stock splits: Companies with stock splits scheduled for the week ahead include Sempra Energy (SRE) with a 2-for-1 split on August 22, Copart (CPRT) with a 2-for-1 split on August 22, and AMC Entertainment (AMC) with a 1-for-10 split on August 24. The AMC stock split will be followed on August 25 by a conversion of all APE (APE) units to common stock.
Spotlight on Nvidia: Nvidia (NVDA) will disclose earnings on August 23 in a report that could create ripples throughout the tech sector. The chip giant is forecast to report revenue of $11.04B and EPS of $2.07. Datacenter revenue is expected to explode to $7.86B from $4.28B in Q1, while revenue in the gaming, professional visualization, and OEM & IP segments are expected to grow at more moderate rates. Citi predicted an AI-driven earnings beat for Nvidia off a blistering data center sales growth of 90% year-over-year and 12% quarter-over-quarter. Baird’s bullish preview on Nvidia included the expectation for strong guidance to be doled out all the through the end of 2024. On an interesting note, Seeking Alpha analyst MM Research tipped that investors should listen for the phrase “at capacity” during the conference call to see where the company stands on meeting AI chip demand. Options trading on Nvidia (NVDA) implies a 12% share price after the report hits. Shares soared 24% the last time Nvidia reported after strong guidance was issued. The tech stocks with the closest trading correlation with NVDA after earnings have been Marvell Technology (MRVL), Monolithic Power Systems (MPWR), Qorvo (QRVO), and Advanced Micro Devices (AMD).
Sporting goods sector read: DICK’S Sporting Goods (DKS) will report earnings on August 22. The sporting goods retailer is forecast to report revenue of $3.24B, EPS of $3.81, and same-store sales growth of 2.5%. JPMorgan thinks the risk-reward profile on DICK’S is negatively biased into the print due in part to difficult sales comparisons for the back half of the year and risk to margins if comparable sales go negative. On the positive, DICK’S continues to perform well with premium allocations, including new products from Deckers Outdoor’s (DECK) HOKA and On Holding (ONON) that could get a call-out on the conference call. DICK’S has topped revenue estimates in five straight quarters and EPS marks in seven straight quarters. Over the last 90 days, just as many analysts have lifted their EPS estimate on DKS as dropped it. Options trading on DICK’S implies a 7% post-earnings swing in share price. The stock fell 1.4% after its last earnings report. Academy Sports and Outdoors (ASO) and Acushnet Holdings (GOLF) are the two stocks that have correlated the tightest to DICK’S following its earnings report.
Corporate events: A busy week of events in the week ahead has the potential to reset the narrative on some key stocks. VMware (NYSE:VMW) will hold its four-day VMware Explore event in Las Vegas. VMWare CEO Raghu Raghuram and Nvidia (NVDA) CEO Jensen Huang are two of the featured speakers. Intel (INTC) will host a live virtual event for researchers, data scientists, and developers focused on building artificial intelligence (AI) applications from edge to cloud. Twilio (NYSE:TWLO) will hold its highly-anticipated customer and developer conference. Along with Twilio executives, OpenAI CEO Sam Altman will be one of the notable speakers. Twilio (TWLO) has been called out by some analysts as an AI play. The stock accounts for 4.11% of the ARK Next Generation Internet ETF, and 4.04% of the ARK Innovation ETF. “It has data on trillions of interactions between businesses and consumers. So we think that the company is going to be a huge beneficiary of the AI software movement,” noted ARK Invest portfolio manager Renato Leggi. Plug Power (NASDAQ:PLUG) will hold a Georgia Analyst Day event. Shares of Plug Power have fallen more than 30% over the last six weeks. Also of potential interest to investors, the Seaport Research Partners Annual Summer Investor Conference, the Citi Midstream / Energy Infrastructure Conference, and the Needham Virtual Semiconductor & SemiCap Conference will take place during the week. See a detailed list of key events for next week in Seeking Alpha’s Catalyst Watch.
Quant ratings: Stocks with recent quant rating changes include General Motors (GM) to Strong Buy from Hold, Post Holdings (POST) to Strong Buy from Hold, and Telos Corporation (TLS) to Sell from Buy. See the stocks with the very highest rated Seeking Alpha Quant Ratings.
Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.
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