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Investors will get their hands on the April CPI and retail sales numbers in the week ahead in two reports that have the potential to reset expectations on the trajectory for rate cuts from the Federal Reserve. Seeking Alpha Investing Group Leader James Foord reasoned recently that the Fed Put is back, and it is more than just dovish rhetoric. “Liquidity dynamics are still supportive of markets over the next few months,” he noted. The geopolitical front could get chippy next week, with the Biden administration expected to announce new tariffs on Chinese electric vehicles and other strategic sectors, including batteries and solar equipment. The fresh levies are a result of the White House’s multi-year review of the Trump-era Section 301 tariffs that began in 2022.
In corporate earnings, some of the major reports to watch include those from Walmart (WMT), Alibaba (BABA), Home Depot (HD), and Deere (DE). The AI battle could also ratchet up. That is because Microsoft (MSFT)-backed OpenAI is expected to announce an AI search tool that could rival Google (NASDAQ:GOOG) (GOOGL), while the annual I/O Developer Conference hosted by Google is anticipated to showcase the tech giant’s latest AI tools and AI-linked enhancements to products as OpenAI Apple (AAPL) will hold a special event on May 7 to showcase new iPad products and hardware accessories. The conference calendar heats up with the JMP Life Sciences Conference, the Needham Technology, Media, & Consumer Conference, and the Bank of America Transportation, Airlines, & Industrials Conference all expected to attract attention.
Earnings spotlight: Monday, May 13 – Petrobras (PBR), Tencent Music (TME), and Agilysys (AGYS). See the full earnings calendar.
Earnings spotlight: Tuesday, May 14 – Home Depot (HD), Alibaba (BABA), Sony (SONY), Tencent Holdings (OTCPK:TCEHY), and Flutter Entertainment (FLUT). See the full earnings calendar.
Earnings spotlight: Wednesday, May 15 – Cisco Systems (CSCO), Grab Holdings (GRAB), Spire Global (SPIR), and Hut 8 (HUT). See the full earnings calendar.
Earnings spotlight: Thursday, May 16 – Walmart (WMT), Applied Materials (AMAT), Deere (DE), JD.com (JD), Baidu (BIDU), Take-Two Interactive (TTWO), and Under Armour (UAA). See the full earnings calendar.
Volatility watch: Options trading volume is elevated on Barnes & Noble Education (BNED) and AMC Entertainment (NYSE:AMC). Short interest moved even higher over the last week on TG Therapeutics (TGTX) and Eos Energy Enterprises (EOSE). The most overbought stocks per their 14-day relative strength index include Vital Farms (VITL), Power Nickel Inc (OTCQB:PNPNF), and Primo Water (PRMW). The most oversold stocks per their 14-day Relative Strength Index include Sprout Social (SPT), Titan International (TWI), and CVS (CVS). In the EV sector, investors will be watching to see how Zeekr (NYSE:ZK) performs in its first full week of trading.
IPO watch: Online casino gaming content provider Games Global (GGL), Chinese education services company Jiade (JDZG), and medication management firm Kindly MD (KDLY) are expected to price their IPOs and begin trading next week. The analyst quiet periods end for Centuri Holdings (CTRI), Ibotta (IBTA), Tungray Technologies (NASDAQ:TRSG), Serve Robotics (SERV), Mingteng International (MTEN), Junee (JUNE), Top Wealth Group Holding (TWG), and mF International (MFI). Of the group, Tungray Technologies (TRSG) has seen the biggest post-IPO share price gain.
Dividend watch: Companies that have an ex-dividend date arriving next week include Delta Air Lines (DAL), Microsoft (MSFT), Marathon Petroleum (MPC), and Honeywell (HON). The list of companies forecast to boost their quarterly dividend payouts include NOV (NOV) to $0.075 from $0.050, LCI Industries (LCII) to $1.15 from $1.05, and Northrop Grumman (NOC) to $2.04 from $1.87. See Seeking Alpha’s list of Quick Dividend Stock Picks.
Investor events: Google (GOOG) (GOOGL) will hold its annual I/O Developer Conference. The tech giant is expected to showcase its latest AI tools and AI-linked enhancements to products. There could also be hardware updates on the Android 15, Pixel 8a, Pixel Fold 2, and Pixel Tablet 2. Looking at pending M&A, shareholders of Carrols Restaurant Group (TAST) will vote on the proposed merger with Restaurant Brands International (NYSE:QSR), and shareholders of Chord Energy (CHRD) will vote on the merger deal with Enerplus (NYSE:ERF). GoodRx Holdings (GDRX) will hold its first Investor Day. The event will feature presentations by top management and an overview of the company’s strategy for long-term growth. Cracker Barrel Old Country Store (CBRL) will hold a business update call covering its strategic transformation plan.
CPI preview: Economists expect both core and headline CPI to be up 0.3% month-over-month in April and for the headline year-over-year rate to slow to a +3.4% pace. Morgan Stanley sees a moderation in core CPI inflation due to weaker pricing in services, including decreased car insurance inflation, continued disinflation in rents, and reduced healthcare costs. The firm also pointed to a less severe decline in core goods inflation, primarily due to improvements in used car inflation. Bank of America said the main factor behind its expectation for a relatively firmer headline CPI print is energy prices. The BofA forecast indicates energy prices rose by 1.3% month-over-month in April due to an increase in gasoline prices. However, the good news is that gasoline prices have fallen in the early part of May as geopolitical risks have eased for the time being. The April data is also expected to continue to show a significant divergence in the price path of core goods and services. BofA thinks the downward trend in core goods prices likely continued in April, while prices for core services are seen continuing to run too high at 0.4% month-over-month due to both sticky shelter and services ex-shelter inflation. If the CPI print arrives even a little bit hotter than anticipated, the case for interest rate cuts in 2024 may lose some steam. Seeking Alpha Investing Group Leader Mott Capital Management reminded investors recently that the Federal Reserve Bank itself has not flipped to being dovish. “In recent months, there has been a lack of further progress toward the Committee’s 2 percent inflation objective,” read the recent FOMC statement.
Home Depot earnings preview: Home Depot (HD) is lined up to report earnings on May 14. The home improvement giant is forecast to report revenue of $36.7B and EPS of $3.61. Same-store sales are seen dropping 2.2% during the quarter, while a gross margin rate of 34.1% and an operating margin rate of 14.0% are anticipated. The company may also provide an update on the acquisition of specialty outdoor building products distributor SRS Distribution for $18.25B. Analysts think the transaction fits Home Depot’s (HD) strategic objectives of share gains, with the business extending deeper into complex renovations and remodels run by residential contractors. SRS adds delivery fleet, inventory breadth, and catalog sharing synergies to the mix. Seeking Alpha analysts are cautious about the setup for Home Depot. Investing Group Leader Envision Research did a recent technical analysis dive in setting a Hold rating, while Gary Gordon stuck to the fundamentals in also posting a Hold rating.
AMC event: AMC Entertainment (AMC) will have listening parties next week for Billie Eilish’s new album at 127 of the company’s multiplexes as the company continues to dabble with using theaters for concert airings. Dolby Cinemas, Apple Music, and Interscope are also part of the collaboration. Last year, AMC saw strong traffic with concert films from Taylor Swift and Beyoncé. Those events helped to offset some of the box office decline caused by the WGA and SAG-AFTRA strikes. The AMC listening parties for Billie Eilish’s new album “Hit Me Hard and Soft” will be in 43 cities nationwide. “There is a lot of interest in the movie industry collectively based on what we have pulled off for Taylor and Beyoncé,” stated AMC CEO Adam Aron on the company’s Q1 earnings conference call. Aron said the Eilish event is not a concert film, but a new album release that has some visuals added. Aron said the company expects to have several major projects each year. Shares of AMC Entertainment (AMC) are down more than 50% in 2024, due in part to soft box office traffic.
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