• The Fed’s charge minimize, the FOMC dot-plot and Powell’s feedback shall be in focus this week.
• Micron gives important upside potential supported by sturdy earnings development and robust demand for its AI-related merchandise.
• Nike faces rising challenges, with declining income, a cautious outlook and weak shopper demand suggesting an additional decline in its inventory value.
U.S. shares closed principally decrease on Friday, with the Dow Jones Industrial Common posting its longest streak of losses since 2020, as traders priced within the risk that the Federal Reserve will minimize charges extra slowly subsequent 12 months.
For the week, the Dow Jones Index fell 1.8%, the S&P 500 fell about 0.6%, whereas the tech-heavy Nasdaq Composite gained about 0.3% to safe its fourth consecutive week of good points.
Supply: Investing.com
The blockbuster week forward is anticipated to be full of a number of market-moving occasions, together with the Fed’s last financial coverage assembly in 2024. An official assertion is anticipated Wednesday at 2:00 p.m. ET. Fed Chairman Jerome Powell will communicate at 2:30 p.m. ET.
With a 25 foundation level charge minimize assured, traders will deal with the central financial institution’s rate of interest steering, whereas Powell could sign a pause in coverage easing.
In the meantime, most essential on the financial calendar shall be Tuesday’s U.S. retail gross sales report, which can shed additional gentle on the well being of the economic system. The private consumption expenditures value index for November, due Friday, may also be carefully watched.
Supply: Investing.com
Elsewhere on the earnings agenda, solely a handful of firm outcomes are due, together with Nike (NYSE:NKE), FedEx (NYSE:FDX), Micron Know-how (NASDAQ:MU), Lennar (NYSE:LEN), Common Mills (NYSE:GIS) and Carnival (NYSE:CCL) as Wall Avenue’s reporting season attracts to an in depth.
No matter which route the market is heading, under I spotlight one inventory prone to be in demand and one that might see additional decline. Remember although that my calendar is simply for the approaching week, from Monday December 16 to Friday December 20.
Micron is ready for a robust week because the reminiscence chip maker prepares to report its first quarter monetary outcomes on Wednesday at 4:05 p.m. ET. A name with Chairman and CEO Sanjay Mehrotra is scheduled for five:00 p.m. ET.
Market contributors count on appreciable motion in MU shares after the replace decline, in keeping with the choices market, with a doable implied transfer of +/-11.7% in both route. Earnings have been catalysts for outsized inventory swings this 12 months, with MU up almost 17% when the corporate final reported quarterly numbers in September.
Wall Avenue expects robust earnings pushed by robust demand for its high-speed reminiscence chips (HBM3E), very important for AI and cloud computing functions.
Including to the bullish sentiment, 16 of 24 analysts surveyed by InvestingPro have revised their earnings estimates upward over the previous three months.
Supply: InvestPro
Micron is anticipated to earn $1.77 per share, reversing a pointy lack of $0.95 per share a 12 months in the past, signaling a big restoration after a troublesome interval within the reminiscence market. Income is anticipated to climb 83.9% yearly to $8.70 billion, pushed by gross sales of high-bandwidth reminiscence gadgets to knowledge facilities working AI functions.
The Boise, Idaho-based firm performs a important function in developments in AI, cloud computing and 5G connectivity by its modern DRAM and NAND merchandise.
Wanting forward, I consider Micron administration will present robust steering for the present quarter to mirror robust reminiscence demand from cloud suppliers, whereas AI development prospects stay robust . Micron’s revolutionary HBM3E know-how, a key enabler for AI workloads, is anticipated to be the 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 hit an all-time excessive of $157.54 on June 18, are up 20.1% 12 months up to now.
Supply: Investing.com
Observe that Micron inventory stays undervalued in keeping with the InvestingPro Truthful Worth mannequin and will see a rise of 8.5% to $111.22.
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In distinction, international sportswear large Nike faces important headwinds this week because it prepares to report its second-quarter monetary outcomes on Thursday at 4:15 p.m. ET.
Regardless of its robust model consciousness, the corporate is grappling with declining shopper demand for athletic attire and footwear, in addition to provide chain challenges.
In line with the choices market, merchants predict a +/-7.7% transfer in both route for NKE inventory following the discharge. Particularly, shares have fallen after earnings over the previous 4 quarters, and continued challenges recommend additional decline.
Analysts minimize their revenue estimates resulting from weakening working margins and slowing development in North America and China, two of Nike’s greatest markets.
Supply: InvestPro
Nike is anticipated to report a 37.8% decline in adjusted earnings per share to $0.64, and income down 9.7% from a 12 months in the past to $12.1 billion. .
The sneaker large has confronted rising challenges in latest quarters, battling weakening demand for athletic footwear and attire in a slowing macroeconomic setting.
The main focus shall be on not too long ago reappointed CEO Elliott Hill’s turnaround plans after the corporate pivoted to a direct-to-consumer mannequin, which struggled to offset falling wholesale income .
NKE inventory — which fell to a 2024 low of $70.75 on Aug. 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% 12 months up to now.
Supply: Investing.com
It is value noting that Nike has a below-average InvestingPro “Monetary Well being” rating of two.4 out of 5.0, resulting from ongoing issues about weakening gross revenue margins and uneven gross sales development.
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Disclosure: As of this writing, I’m lengthy the S&P 500 and Nasdaq 100 by the SPDR® S&P 500 ETF (SPY) and the Invesco QQQ Belief ETF (QQQ). I’m additionally lengthy the Invesco Prime QQQ ETF (QBIG), the Invesco S&P 500 Equal Weight ETF (RSP), and the VanEck Vectors Semiconductor ETF (SMH).
I frequently rebalance my portfolio of particular person shares and ETFs primarily based on an ongoing evaluation of dangers associated to the macroeconomic setting and firm monetary knowledge.
The views mentioned on this article characterize the opinion of the writer solely and shouldn’t be thought of funding recommendation.
Observe Jesse Cohen on X/Twitter @JesseCohenInv for extra evaluation and knowledge on the inventory market.
