U.S. stocks ended a rocky week with declines on Friday as Nvidia's monster rally ended, weighing on other AI-related chip companies.
Both indexes hit record highs in early trading after the latest labor market data showed the U.S. economy added more jobs than expected in February and the unemployment rate rose for the first time in four months. .
For the week, the benchmark S&P 500 fell 0.3%, the tech-heavy Nasdaq fell 1.2%, and blue-chip stocks fell 0.9%.
Source: Investing.com
Next week is expected to be another eventful week as investors continue to look for further clues on the outlook for a potential rate cut.
Most important on the economic calendar is the February US Consumer Price Inflation Report due out on Tuesday, with headline annual CPI expected to hold steady at 3.1%.
Source: Investing.com
CPI data also includes the latest retail sales and producer price reports to help you understand the state of inflation.
As of Sunday morning, financial markets believed there was a 75% chance the Fed would cut interest rates in June, according to Investing.com.
Other important earnings reports to watch include updates from Oracle, Adobe (NASDAQ:), SentinelOne (NYSE:), and Jabil Circuit (NYSE:). Several consumer companies, including Ulta Beauty (NASDAQ:), Dollar General, Dollar Tree (NASDAQ:), Kohl's (NYSE:), and Dick's Sporting Goods (NYSE:), also weighed in on Wall Street's fourth-quarter reporting season. We will also be announcing financial results. Nearing the end.
Regardless of which direction the market goes, here are stocks that are likely to be in demand and that are poised for new downside. However, my time frame is: just For the next week, From Monday, March 11th to Friday, March 15th.
Stock to buy: Oracle
We expect Oracle (NYSE:) stock to outperform this week. That's because the cloud and software company is likely to see solid revenue and profit growth in the coming quarters, with a positive outlook, thanks to the broad strength of its cloud business.
Oracle is scheduled to release its fiscal third-quarter earnings report after the U.S. market closes at 4:05 p.m. ET on Monday.
According to the options market, market participants expect ORCL stock to move significantly after this updated decline, with an expected move of around 7% in either direction. The stock price has fallen about 11% since the company's last earnings report in mid-December.
Source: InvestingPro
Wall Street expects the Austin, Texas-based tech giant to report fiscal third-quarter earnings of $1.38 per share, an improvement of 13.1% from a year ago on the positive impact of continued cost-cutting measures. .
Analysts surveyed by InvestingPro have raised their EPS estimates 12 times in the past 90 days, while 10 of the analysts surveyed have lowered their earnings estimates for ORCL.
Meanwhile, Oracle's revenue is expected to increase 7.2% year over year to $13.29 billion, reflecting strong growth in its cloud services and infrastructure business, which is seeing increased demand from generative AI companies.
In my opinion, Oracle's latest update on the performance of its license support division will be a surprising pick-up, reflecting increased demand from both large enterprises and government agencies.
As such, I think Oracle CEO Safra Catz offers a positive outlook as the company's cloud business is well-positioned to benefit from growth in AI trends and a close partnership with Nvidia (NASDAQ:). believe.
Source: Investing.com
ORCL stock, which hit an all-time high of $127.54 in June 2023, closed at $112.45 on Friday. With a market capitalization of $309 billion, Oracle is one of the world's most valuable database software and cloud computing companies.
Year-to-date, the stock has gained 6.6%, significantly outpacing the 2.1% gain recorded by the SPDR® S&P Software & Services ETF (NYSE:), which tracks an equal-weighted index of software and services companies in the S&P 500. . .
As ProTips notes, Oracle is in “good” financial health thanks to a solid revenue outlook and solid profitability outlook. Furthermore, it is worth noting that the company has continued to increase dividends for 10 consecutive years.
Selling brand: Dollar General
Dollar General (NYSE:) expects disappointing results in the coming week as the discount retailer's latest earnings report and forward outlook are likely to underwhelm investors due to several headwinds to its business. I think it will fall into.
Dollar General's fourth-quarter update covers the holiday season and is expected to be released before U.S. markets open at 6:55 a.m. ET on Thursday, with results hurt by lower store foot traffic. expected to receive. So are rising cost pressures and declining operating margins.
Underscoring some of the short-term challenges facing Dollar General in the current climate, 10 of 22 analysts surveyed by InvestingPro said the company's earnings were down 43.6% from their initial forecasts. To reflect this, we have revised downward our profit forecast for the three months leading up to printing.
Traders are pricing in DG stock to move about 8% in either direction following the announcement, according to options markets. Notably, since the company's third-quarter report in December, the stock price has fallen 5%, marking the sixth consecutive negative earnings day reaction.
Source: InvestingPro
Dollar General, which operates 20,000 stores across the U.S., is expected to report fourth-quarter earnings of $1.73 per share, down 41.5% from $2.96 a year earlier due to higher operating costs.
Meanwhile, sales are expected to decline 4.2% annually to $9.77 billion, reflecting weak demand for general merchandise and high-margin products in the current macro environment.
Retailers are also believed to be vulnerable to the negative impact of the ongoing retail theft, or “shrink” trend across the industry.
As such, I think Dollar General's management will disappoint investors with its fiscal 2024 forward guidance and take a cautious stance amid weak consumer spending and declining operating margins.
Source: Investing.com
DG stock closed Friday's trading at $157.42, slightly below the previous session's six-month high of $159.20. At its current valuation, Dollar General has a market capitalization of $34.5 billion, making it the largest U.S. dollar store in the United States and one of the nation's largest discount retailers.
Shares of the Goodlettsville, Tennessee-based discount retail chain are off to a strong start in 2024, up 15.7% since the beginning of the year. This compares to his 4.3% gain recorded by the Consumer Staples Select Sector SPDR® Fund (NYSE:) over the same period.
With that in mind, DG stock appears to be significantly overvalued heading into the fourth quarter earnings report, according to InvestingPro's quantitative model.
The company's “fair value” price target is $134.03, indicating a downside of -14.9% from the current market value.
To stay on top of market trends and what they mean for your trading, be sure to check out InvestingPro.
Readers of this article can enjoy an additional 10% discount on annual and biennial plans using a coupon code PROTIPS2024 (every year) and PROTIPS20242 (Biennial).
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Disclosure: As of this writing, I am long the S&P 500, but via the SPDR® S&P 500 ETF (NYSE:).and Invesco QQQ Trust ETF (NASDAQ:). I am also long Technology Select Sector SPDR ETF (NYSE:).
I regularly rebalance my portfolio of individual stocks and ETFs based on an ongoing risk assessment of both the macroeconomic environment and corporate finances.
The views expressed in this article are solely those of the author and should not be taken as investment advice.
