BREAKING: Market Strengthens But This Looms
The S&P 500 and the Dow industrials retook technical support at critical levels on Friday. The Nasdaq ran cooler, as earnings disappointments unraveled Amazon and Meta Platforms. That sends a forked stock market into the coming week’s Fed policy announcement and October’s payrolls report. The Dow is mostly through its reports for the season. The S&P 500 is around its midpoint. And LNG stocks, drug distributors and managed care providers are among the leaders running hot ahead of their pending performance reports.
The stock market continues to be volatile, but liquefied natural gas plays are performing well under the pressure. European demand, which boomed due to the Russia-Ukraine war, is now in a lull, but there appears to be long-term demand for LNG around the world. Cheniere Energy (LNG), Flex LNG (FLNG), Golar LNG (GLNG), New Fortress Energy (NFE) and Excelerate Energy (EE) are all in bases, moving toward buy points. Cheniere’s base has held firm support at its 10-week moving average. The others are in the process of regaining support. The companies approach the LNG markets in various ways, so they don’t always move in lockstep. But all have had recent base-count resets.
The Fed headlines a huge week with an economic policy statement Wednesday afternoon. Wall Street fully expects a fourth straight 75-basis-point rate hike, lifting the Fed’s key rate to 3.75%-4%. The bigger question is how much further the Fed will hike on Dec. 13 and Feb. 1 — before a possible pause. The S&P 500 will take its cue from Fed chief Jerome Powell’s post-meeting news conference. Since late August, Powell has talked tough, avoiding any signal that would rally markets and ease financial conditions. Another Paul Volcker-like performance would sink markets, but some of Powell’s colleagues are expressing concern about overtightening, so Powell may try to find a middle ground.
The October jobs report, out Friday at 8:30 a.m., is expected to show that U.S. employers added 200,000 workers this month. That would be another step down from 263,000 in September and 315,000 in August, but still much hotter than the Fed would like to see.
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The Job Openings and Labor Turnover survey for September, out Tuesday at 10 a.m., will provide another key indication of labor market tightness. The August report showed job openings fell by more than a million, but there were still 1.7 openings per unemployed worker.
The Institute for Supply Management’s manufacturing survey index, also out Tuesday at 10 a.m., could be another stock market mover if it undercuts the 50 neutral level. The index showed the factory activity gauge at 50.9 in September, signaling modest expansion.
Chinese EV startups Nio (NIO), Xpeng (XPEV) and Li Auto (LI) are due to report October sales, along with EV giant BYD (BYDDF). With three new models, Nio has said it expects record deliveries in every month of the current fourth quarter. In Q3, Nio outpaced startup rivals Xpeng and Li, reversing trends earlier this year, but BYD remained far ahead overall and is a growing threat to Tesla (TSLA) in China’s fast-growing EV market. China EV sales soared 83% in September, while overall car sales grew just 3%, a two-decade low. However, the country is bracing for a slowdown as fresh Covid cases are breaking out while China vows to continue its strict “zero Covid” containment policy.
Dow/S&P 500 earnings: After a big rollout to the season, only four of the Dow industrials’ 30 names have yet to report. Amgen is next up, on Thursday, followed by Walt Disney (DIS) on Nov. 8 and Walmart (WMT) and Home Depot (HD) on the 15th. On the S&P 500, about 49% of the index’s stocks — representing 65% of its market value — had reported through Thursday. Nearly 70% of those reported earnings beats, with beats running above 80% in the industrial, consumer staples and information technology sectors. Misses were heaviest, at about 50%, among real estate names.
Lithium stocks will be in focus in the coming week, with earnings due from Livent (LTHM) on Tuesday afternoon and Albemarle (ALB) late Wednesday. Amid soaring lithium prices and improved contract terms, Livent’s EPS is seen rocketing 1,200% to 39 cents. Albemarle is expected to post a profit of $6.95 a share, up 562%. LTHM stock is right at its 50-day line about 15% below a 36.48 buy point. ALB stock has climbed above its 50-day and is within 9% of a 308.34 buy point.
Fertilizer stock CF Industries (CF) reports Q3 earnings late Wednesday, followed by Nutrien (NTR) after the close on Thursday. CF earnings are expected to rise 226% to $3.33 a share, as revenue grows 75% to $2.39 billion. Nutrien EPS is seen rising 193% to $4.04 on revenue growth of 51% to $8.78 billion. CF stock is holding slightly above its 50-day average and about 11% below a 119.70 buy point. NTR stock is stuck below its 50-day line and about 30% below its April high.
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The hottest stocks in the top-tier managed care group have earnings on tap in the coming week, with Humana (HUM) set to report early Wednesday and Cigna (CI) early Thursday. CVS Health (CVS) also reports early Wed. Humana EPS is expected to rise 30% to $6.27 as revenue grows 9% to $22.76 billion.
Cigna is seen posting EPS of $5.72, a penny below year-ago results, as revenue rises 4% to $44.76 billion. CVS earnings should rise 1.5% to $2 a share on revenue growth of 4% to $76.75 billion. HUM and CI stocks have both climbed out of buy range, with Humana buoyed by Medicare Advantage momentum and Cigna assisted by a new prescription benefit contract win from Centene. CVS stock has struggled after a hit to Medicare Advantage ratings and the loss of its Centene contract.
Advanced Micro Devices (AMD) and Qualcomm (QCOM) are among at least 20 semiconductor stocks with September-quarter results due in the week ahead. AMD will post its third-quarter results late Tuesday. Qualcomm will follow late Wednesday. Other leading chipmakers with earnings reports coming include Microchip Technology (MCHP), NXP Semiconductors (NXPI), Onsemi (ON) and Rambus (RMBS). Chipmakers exposed to consumer device markets have been hit by slowing demand. And industrial and data center chip markets are starting to show signs of weakness.
Eli Lilly (LLY), Pfizer (PFE) and Moderna (MRNA) are among a handful of big-name drugmakers on deck to report their September-quarter earnings next week. The list kicks off with Lilly, Pfizer and Neurocrine Biosciences (NBIX) before the stock market opens on Tuesday. Analysts expect Lilly’s adjusted earnings to sink 1.5% to $1.91 while revenue would come in at $6.89 billion, up almost 2%. Investors will likely look for news on Lilly’s efforts in obesity treatment and Alzheimer’s disease. Pfizer, the biggest Covid name, is projected to earn $1.39 a share on $21.07 billion in sales. Earnings would climb nearly 4% while sales would decline almost 13%.
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Analysts predict Neurocrine will earn 81 cents a share and report $377 million in sales. Earnings would surge 252% as sales rocket north of 27%. GSK (GSK) will follow on Wednesday. The Street calls for the U.K.-based drugmaker to report 91 cents per share, declining by 10 cents from the year-earlier period. Sales are also forecast to fall by a third to $8.32 billion following the spinoff of its consumer health care division, Haleon, this past summer.
Regeneron Pharmaceuticals (REGN), Amgen (AMGN) and Moderna will wrap up the week with early Thursday reports. Regeneron’s sales are expected to fall more than 15% to $2.92 billion as adjusted EPS sinks nearly 37% to $9.74. Similarly, the Street predicts Amgen earnings of $4.44 per share and $6.56 billion in sales, down a respective 5% and 2%. Analysts will also watch Moderna’s Covid vaccine sales. Moderna’s EPS is projected to slide 57% to $3.30 per share as sales tumble 29% to $3.53 billion.
Travel rebounded near pre-pandemic levels this summer which should provide a boost to hotels and online bookers reporting earnings this week. But the strength of the U.S. dollar could eat into results and recessions domestically and abroad could create headwinds for the industry group. Both Marriott International (MAR) and Hyatt Hotels (H) stocks’ relative strength is at new highs ahead of their Thursday reports. Analysts expect Marriott earnings to catapult 66% to $1.68 per share while revenue leaps 33% to $5.28 billion.
However, Hyatt Hotels earnings are seen tanking 88% to 26 cents per share while revenue spikes 71% to $1.46 billion. Meanwhile, Truist analyst Naved Khan anticipates “healthy” results from online travel agents driven by strong demand and traffic trends. Wall Street sees Airbnb (ABNB) EPS growing 17% to $1.67 on a 27% revenue jump to $2.85 billion for its Tuesday report. Meanwhile, analysts expect Expedia (EXPE) earnings to rise 16% to $4.13 per share on 21% revenue growth to $3.59 billion on Thursday.
Drug distributors McKesson (MCK) and Cardinal Health (CAH) are breaking out as they prepare to report earnings in the coming week. Late Tuesday, McKesson is on deck to post its fiscal second-quarter earnings. Analysts call for adjusted income of $6.07 per share and $70.31 billion in sales. Earnings would slide 1.3% as sales inch up 5.6%. Before the stock market opens Friday, analysts project Cardinal Health will report 96 cents in adjusted EPS and $48.32 billion in fiscal first-quarter sales. Earnings would tumble almost 26% as sales climb about 10%.
The IBD Computer-Software Security group ranks No. 120 out of 197 groups tracked. Shares in Check Point Software Technologies (CHKP) climbed on its Q3 earnings report Oct. 27. Its rival, Fortinet (FTNT), reports Q3 earnings on Nov. 2. Both companies sell computer network firewall gear and software. Analysts expect Fortinet’s EPS to grow 26% to 27 cents with revenue rising 29% to $1.12 billion. Qualys (QLYS), a provider of security vulnerability analytics, reports Q3 earnings on Nov. 2.
Analysts expect profit to be flat at 86 cents. Analysts forecast revenue of $124.9 million, up 19%. CyberArk Software (CYBR) reports Q3 earnings on Nov 3. Analysts predict a loss of 21 cents per share, widening from a 6-cent loss a year earlier. Revenue is expected to climb 24% to $150.8 million. Hackers often aim to compromise networks by targeting employees or management with administrative access to company computer systems. CyberArk’s software monitors and manages privileged accounts.
ON Semiconductor (ON), often referred to as Onsemi, will deliver its third-quarter results early Monday. Analysts expect the chipmaker to earn $1.31 a share, up 51% year over year, on sales of $2.12 billion, up 22%. ON stock has been consolidating for the past 10 weeks with a buy point of 76.88.
Williams Companies (WMB) reports third-quarter earnings after the stock market closes Monday. Analysts forecast EPS growing 29% to 44 cents per share while sales are expected to increase 16% to $2.9 billion for the energy infrastructure company.
Late Monday, Avis Budget Group (CAR) should report a 35% EPS gain to $14.46 on an 18% revenue increase to $3.5 billion.
BP (BP) announces Third-quarter earnings early Tuesday. The London-based energy giant’s earnings are expected to shoot up 97% to $1.95 per share. The Street forecasts revenue growing 56% to $59.2 billion.
Chesapeake Energy (CHK) reports third-quarter results after the stock market closes Tuesday. Analysts project earnings for the Oklahoma-based oil producer surging 87% to $4.45 per share. Sales are forecast to grow 20% to $1.8 billion.
American International Group (AIG) reports third quarter results Tuesday afternoon. Analysts see the insurer’s earnings plummeting 48% to 50 cents per share while revenue sides 7% to $11.1 billion.
Roku (ROKU) will report its third-quarter results late Wednesday. Wall Street expects the streaming video platform to add 1.02 million users for a total of more than 64 million active accounts. Analysts see Roku losing $1.29 a share on sales of $697 million as it invests in ad-supported online television.
Illumina (ILMN) is on deck to report its third-quarter earnings late Thursday. Analysts predict adjusted income of 30 cents per share and $1.11 billion in sales. Earnings would take a 79% dive as sales stay flat. Shares are snapping above a bottoming base.
Pop culture collectible company Funko (FNKO) gives an update on its Q3 performance Thursday. Wall Street expects adjusted earnings to jump 28% to 50 cents per share while sales climb 19% to $321 million.
Mattress maker Tempur Sealy International (TPX) is basing ahead of Thursday’s third quarter results. Estimates see the company behind the Tempurpedic brand reporting a 14% decline in earnings to 75 cents per share on a 5% decrease in revenue.
Berkshire Hathaway (BRKB) may report third-quarter earnings over the weekend, after boosting its stake in Occidental Petroleum (OXY) to more than 20% during the period and completing its purchase of insurer Allegheny on Oct. 19.
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3:35 AM ET The stock market rally faced hurdles but revved higher. Time to step on the gas? But the Fed meeting looms…
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Large corporate buyers and new financial instruments are driving change in the single-family home rental market. (© Gary Neill)
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