Stock Market Action Plan, May 15-19: Walmart, Target, Home Depot, On Holding Earnings

The Dow and S&P 500 both gave up ground, but tech stocks pressed higher, hoisting the Nasdaq to a third straight weekly advance and its best weekly finish since August. Retail rears its head in the coming week as Dow Jones retailers Walmart (WMT) and Home Depot (HD) lead the list of earnings reports. Another Dow name, Cisco Systems (CSCO), leads the reports for the tech sector. Results are due from highflying footwear brand On Holding (ONON). And there could be some more sparks among the big China-based names, as Alibaba (BABA) and Baidu (BIDU) lead that roster of reports.

Stocks To Watch: Five Stocks Near Buy Points

The stock market rally diverged somewhat, with megacaps lifting the Nasdaq but some weakness elsewhere. Among the leaders showing resilience right around their 10-week moving averages, New Relic (NEWR) ended the week back above its 10-week line, below a flat base buy point at 80.98. Flywire (FLYW) is retaking a buy point after a rebound from its 10-week line. Kinsale (KNSL) and Dexcom (DXCM) have each lined up several weeks of tight closes just below valid buy points: Kinsale at 337.22 and Dexcom at 125.65. ASML Holding (ASML) is among chip-gear giants setting up. The stock is fighting to hold 10-week support as it builds the right side of a 14-week cup base.

Stock Market Econ Calendar: Will The Jobs Fever Break?

The most-anticipated economic report for the coming week will probably be the Labor Dept.’s weekly claims for jobless benefits, out Thursday at 8:30 a.m. ET. After claims surged 22,000 to a cycle-high 264,000 in the week through May 6, the key question is whether claims have broken to the upside or whether the latest reading was quirky, perhaps due to seasonal factors.

Futures: Why This Market Is So Dangerous. What To Do Now.

The April retail sales report, released by the Commerce Dept. on Tuesday at 8:30 a.m., will provide an update on the state of the consumer. The data may give a mixed picture. Economists expect a 0.7% rise, following a 0.6% pullback in March. But April’s strength was focused on autos. So-called “control group” sales, which exclude sales from auto dealers, building materials, gas stations and a few other categories, are seen slipping 0.3% for a second straight month.

Also on Tuesday, industrial production, released by the Fed at 9:15 a.m., is seen slipping 0.1%. Manufacturing output also is expected to fall 0.1% after a 0.5% decline in March. A raft of housing data also is coming. The NAHB Housing Market Index is out Tuesday at 10 a.m. Building permits and housing starts are out Wednesday at 8:30 a.m. Existing home sales are due Thursday at 10 a.m.

Big Box Retail: Target Looks For A Rematch

Retail earnings come into sharp focus this week as several top chains report. Projections call for Walmart earnings to come in flat, down slightly for the full year. Views see a 5% jump in Q1 revenue, with a 3% gain for the year. Target (TGT) faces a low bar, with earnings seen dropping nearly 19% in a fifth straight down quarter, before turning to rise an estimated 40% for the year. Walmart stock is basing, just a fraction below a buy point. Target has been in a flattish consolidation since diving nearly 30% following its Q2 report last year.

Home Depot stock has lagged, as the housing market continues to send mixed signals. Analysts project the company’s first earnings and revenue declines in at least two years, with forecasts for more to come.

Blue Chip Notebook: The Divided Dow

The Dow’s lackluster, less-than-1% gain so far in 2023, belies the complex action occurring within the industrials. Microsoft (MSFT) and Apple (AAPL) are both up more than 30% so far for the year. Salesforce.com (CRM) has a 55% gain. Disney (DIS), Intel (INTC) and McDonald’s (MCD) all have double-digit advances, far ahead of the S&P 500. That, of course has powered the Nasdaq’s almost 18% year-to-date gain. On the downside, 3M (MMM) and Walgreens (WBA) have each fallen more than 15%. IBM (IBM), Chevron (CVX) and Caterpillar (CAT) all have double-digit declines. Overall, exactly half of the 30 Dow stocks have gained, half have declined, since Dec. 31.

Footwear: On Holding, Foot Locker Earnings

On Holding and Foot Locker (FL) report quarterly results next week as footwear stocks continue to outrun most industries so far this year. FactSet analysts expect On Holding earnings to double to 10 cents per share for its Q1 results early Tuesday as revenue rockets 81.4% to $430 million. The Swiss shoe company averaged 66% sales growth over the past four quarters. Meanwhile, analysts expect Foot Locker earnings to halve to 78 cents per share for its report Friday morning, which would mark six straight quarterly declines for the shoe retailer. FactSet forecasts an 8.5% drop in sales to $1.99 billion. FL stock tumbled 13.2% over the past three months but is up 2.5% this year.

China Tracker: Alibaba, Baidu, Tencent Earnings

Retail heavyweight JD.com (JD) offered an encouraging view into China on Thursday, beating Q1 expectations and delivering a positive outlook. On Tuesday, Baidu is expected to post earnings and revenue gains, while analysts call for a tightly mixed report from Alibaba on Thursday. Tencent (TCEHY) may announce during the week, but has not confirmed a date. Vipshop (VIPS), which reported in April, surged almost 8% on the JD.com news. That left shares less than 2% below a 16.28 buy point in a 15-week base.

A Peek At The Farm Economy

Deere reports early Friday. The construction and agricultural equipment maker, a bellwether for the U.S. farm economy, is likely to post 25% EPS growth on a 19% revenue gain. That would mark the second straight quarter of slowing sales growth. Investors will watch the tone of Deere’s market outlook, after the U.S. Department of Agriculture forecast U.S. net farm income will drop by 15.5% this year. China has slowed its U.S. purchases, turning instead to Brazil as its top corn and soy supplier, which could affect Deere’s South America units. Deere shares are down almost 14% year to date.

Stock Market Earnings Bullets

Monday

Low-cost Ireland-based Ryanair Holdings (RYAAY) is expected to report a loss of $1.18 per share for its Q4 results Monday, May 22, widening from a loss of 48 cents per share last year as revenue spikes 60.9% to $1.97 billion. The Irish airline trades as American depositary receipts (ADRs) under the RYAAY ticker on the New York Stock Exchange. RYAAY is trading in the buy zone for a flat base after passing the 99.44 buy point on May 11.

James Hardie (JHX), a maker of concrete-based siding for residential homes, reports fiscal fourth-quarter results Monday amid the somewhat bewildering boom in homebuilding. Analysts see a second straight earnings decline, as well as a modest drop for the year. Targets point to a dip for the quarter, and a 4% gain for the year. Still, Hardie shares (also ADRs) are up 26% for the year, and just shy of a 22.98 entry in a cup-with-handle base.

Wednesday

Dow Jones networking gear maker Cisco Systems (CSCO) reports after the stock market close Wednesday. Analysts see an uptick in company momentum, with earnings and revenue posting double-digit gains, vs. recent low- to mid-single digit growth. Shares are down for the year, but investors will be tuned to whether the company makes any commitments to allocate some of the $29 billion in cash on its books.

Is Cisco Stock A Buy Amid Debate Over Acquisitions, Capital Returns?

TJX Companies (TJX) reports early Wednesday. Wall Street expects a 5% EPS increase on a 4% sales gain. Both earnings and sales growth are seen slowing from the prior quarter.

SQM (SQM), the Chilean lithium and fertilizer producer, will report first-quarter results late Wednesday. Profit surged in 2022, but lithium prices began a 70% plunge in November that will gradually feed through to results. Analysts see EPS up 8% to $3.01 as sales grow 22% to $2.46 billion.

Software maker Dynatrace (DT) reports fiscal Q4 earnings before the market open on May 17. Analysts will be looking for guidance for fiscal 2024. For Q4 fiscal 2023, analysts expect EPS of 22 cents, up 29%. Revenue is expected to rise 21% to $305.5 million. Dynatrace’s computer network monitoring tools measure and analyze the performance of business-critical applications.

Thursday

Applied Materials (AMAT) plans to report its fiscal second-quarter results after the stock market close on Thursday. Analysts expect the semiconductor equipment maker to earn $1.84 a share, down a penny from a year earlier, on sales of $6.39 billion, up 2%.

Canadian Solar (CSIQ) announces first-quarter financials early Thursday. Analysts predict earnings skyrocketing 335% to 61 cents per share in Q1 while sales are expected to increase 37% to $1.71 billion. CSIQ profits soared 135% to $3.44 per share in 2022 and Wall Street forecasts full-year 2023 EPS growing another 43% to $4.93.

Ross Stores (ROST) reports late Thursday. Analysts expect a 9% EPS rebound on a 3% sales increase. The discount apparel retail returned to growth last quarter after a string of declines.