Stock Market Action Plan: Nvidia, D.R. Horton And A Wave Of Retail Earnings

The Dow industrials clocked their first gain in three weeks. The S&P 500 snapped short-term resistance and posted its strongest weekly close since August. Meanwhile, the Nasdaq shook off distribution days and rallied to its best week since March, and also its highest close since August. The stock market still has plenty of ailments that could trip things up in the wink of an eye: banks, debt ceiling negotiations, Fed rate decisions, commercial real estate defaults. But, for now, there are enough bullish signals for investors to boost levels of exposure.

The coming week offers plenty of leading stocks near buy points. And earnings from Nvidia (NVDA), D.R. Horton (DHI), Dick’s Sporting GoodsDKS and ELF BeautyELF provide a broad range of market opportunities. The stock market could be subject to Fed-related economic data, and to the ongoing debt ceiling talks in Washington, as well as any fresh news on the outlook, good or bad, for regional banks.

Stocks To Watch: Five Stocks Build Flat Bases

With the market moving up after a stretch of volatile sideways action, a number of stocks are setting up in flat bases. Flat bases — at least five weeks long and not more than 15% deep — show a stock standing its ground. Security software leader Fortinet (FTNT) is flirting with a buy point from a V-shaped flat base. Cadence Design Systems (SNPS). And chipmaker Analog Devices (ADI) is within 5% of its buy point with earnings due this week. Meanwhile, maintenance supplies distributor W.W. Grainger (GWW) and Argentina-based MercadoLibre (MELI) also are setting up.

Econ Calendar: Shaping The Fed’s June Vote

With the next big Fed meeting just a few weeks away, on June 13-14, we still have a few major economic reports that will shape the outcome. One of the biggest comes Friday at 8:30 a.m. ET, with release of the Commerce Department’s personal income and spending data for April, which includes the Fed’s favorite inflation measure, the core personal consumption expenditures price index. Economists expect core inflation to rise 0.3% on the month, with the annual core inflation rate holding steady at 4.6%. The key data point will be for core nonhousing services inflation, since Fed chair Jerome Powell is worried about high wage growth feeding through to services prices. Prices for core services, such as health care, haircuts and hospitality, slowed in March. Another tame reading would be great news for the Fed.

Fed meeting minutes from the May 2-3 conclave will be released on Wednesday at 2 p.m. Fed officials have been making headlines recently with pretty hawkish talk, but the minutes will be scoured for new clues about their intentions.

Also on the agenda, the S&P Global preliminary survey of manufacturing and services firms, out Tuesday at 9:45 a.m., will provide an early read on the strength of economic activity this month. New home sales are due Tuesday at 10 a.m. Pending home sales, an early read on sales of existing homes ahead of the drawn-out closing period, follow on Thursday at 10 a.m.

Durable goods orders, out Friday at 8:30 a.m., will illuminate the latest trends in business equipment investment.

Stock Market Status: Bullish Overtones

A fourth straight weekly advance, and its biggest week since March, sent the Nasdaq to a nine-month closing high. Bullish overtones in Wednesday’s session, followed by more gains on Thursday, wiped out the Nasdaq’s remaining distribution days. The S&P 500 aced its highest mark so far this year, and briefly rose to a nearly nine-month high. Computer hardware and chip equipment makers were among the week’s fastest-moving industries. A sharp rebound among regional banks was trimmed somewhat on Friday, by comments from Treasury Secretary Janet Yellen.

Semiconductors: Nvidia Earnings Set For A Dip

Graphics-chip maker and artificial-intelligence powerhouse Nvidia will release its fiscal first-quarter results late Wednesday. Analysts expect the Santa Clara, Calif.-based company to earn 92 cents a share, down 32% year over year, on sales of $6.5 billion, down 21%. Wall Street sees Nvidia returning to growth in its fiscal second quarter. Nvidia shares are up almost 114% for the year and nearing record highs, set November 2021, just above 346. The stock has gained nearly 66% following a late-January breakout. Other chipmakers posting quarterly results in the week ahead include Analog Devices on Wednesday and Marvell Technology (MRVL) on Thursday.

Earnings Season: A Wave Of Retail Reports

With the industry’s biggest reports — from Walmart (WMT), Home Depot (HD) and Target (TGT) — now past, the coming massive week for retail reporting includes Lowe’s (LOW), Dick’s Sporting Goods, AutoZone (AZO), Urban Outfitters (URBN), Dollar Tree (DLTR) and Kohl’s (KSS), to name a few. Retailers are under scrutiny after April retail sales turned higher after a two-month decline, even as consumers wrestle inflation and rising interest rates. Inventory levels and pricing strength will be a central focus.

Automakers: Ford Capital Markets Day

Ford (F) will host an event on Monday May 22, where it plans to update investors on the progress of its “Ford+” growth strategy. Analysts expect the automaker to mostly reiterate its late-2026 targets, including 2 million EV volumes, 8% EV margins and 10% operating margin. They are eager for details about the path to achieving these somewhat lofty goals. In Q1, Ford sold 10,866 EVs in the U.S. The aspiring Tesla (TSLA) rival could preview its second-gen EV technology, including cheaper batteries. Investors continue to flee Ford stock, which languishes at multiyear lows after the automaker in early May disclosed swelling losses on its shift to electric vehicles.

Real Estate Markets: Seeking Momentum Affirmation From Toll Bros.

Investors hawkishly watching residential real estate markets received a nice bump on Wednesday as housing starts and building permit numbers came in well ahead of expectations. A key question is whether earnings due Tuesday from Toll Brothers (TOL) will reflect similar momentum. Homebuilder stocks have provided a hot ticket in a mediocre rollout for 2023. A number of industry leaders, including D.R. Horton, Pulte Group (PHM) and Taylor Morrison (TMHC), are up sharply for the year and plying new highs. Toll Brothers is in that group, up almost 35% year to date and knocking off 16-month highs.

Stock Market Earnings Bullets

Monday

Zoom Video Communications (ZM) reports Q1 results after the market close on May 22. Analysts estimate adjusted profit of 99 cents, down nearly 5% from a year earlier. Revenue is expected to dip nearly 1% to $1.084 billion. Sales growth has decelerated for five quarters.

Tuesday

Lowe’s (LOW) reports first-quarter financials late Tuesday. Wall Street forecasts Lowe’s earnings dipping 2% to $3.44 per share with revenue sliding 8% to $21.64 billion. Lowe’s comes after Home Depot (HD) guided lower for 2023 based on dropping lumber prices, unfavorable spring weather and a moderating home improvement market. Analysts project LOW full-year profits slipping 1% to $13.57 per share, according to MarketSmith.

Cybersecurity firm Palo Alto Networks (PANW) reports fiscal Q3 earnings after the market close May 23. Analysts estimate adjusted EPS of 93 cents, up55% from a year earlier. Revenue is expected to grow 24% to $1.715 billion. Analysts project billings of $2.23 billion, up 24%.

Dick’s Sporting Goods reports Q1 results early Tuesday. Analysts expect adjusted earnings to increase for the first time in four quarters, jumping 11.6% to $3.18 per share on 4% revenue growth to $2.8 billion. DKS stock is trading in a flat base with a 152.71 buy point.

AutoZone (AZO) reports early Tuesday. Analysts expect the auto parts retailer to post an 8.5% EPS increase on a 6.7 % sales gain. Both earnings and sales growth are seen slowing modestly vs. the prior quarter. AZO stock remains in the buy zone from an April double-bottom breakout.

Amid speculation over a private equity buyout, New Relic (NEWR) reports fiscal Q3 earnings after the stock market close on May 23. The software maker also hosts an analyst day on May 25. For fiscal Q3, analysts expect the company to swing to a 22-cent adjusted profit vs. a 24-cent loss a year earlier. Revenue will climb 17% to $241.1 million, analysts estimate.

Intuit (INTU) plans to post its fiscal third-quarter results late Tuesday. Wall Street expects the TurboTax maker to earn $8.49 a share, up 11% year over year, on sales of $6.09 billion, up 8%.

Wednesday

Splunk (SPLK) reports Q1 earnings after the market close on May 24. Analysts expect a smaller adjusted loss of 14 cents versus a 32-cent loss a year earlier. The software maker’s revenue will rise 7% to $723 million, analysts estimate.

Analysts forecast department store giant Kohl’s (KSS) to report a loss of 43 cents per share from earnings of 11 cents per share last year for its Q1 report Wednesday morning. Sales are expected to fall for the sixth straight quarter, edging down 1.5% to $3.42 billion.

America’s Car-Mart (CRMT) reports early Wednesday. The used car dealer is likely to post a 77% EPS drop despite a 4.6% revenue gain. That would mark the sixth straight quarter of earnings declines but a slight improvement from a 92% drop the prior quarter, which was due to bad weather and higher credit losses.

ELF Beauty reports fourth-quarter 2023 financials after the stock market closes Wednesday. Wall Street predicts earnings jumping 54% to 20 cents per share with revenue increasing 48% to $156.10 million. For fiscal year 2023, Wall Street forecasts profits growing 70% to $1.43 per share and sales leaping 40% to $548 million. ELF stock is up 60% since the beginning of 2023 but is in the midst of a pullback.

Photronics (PLAB) will disclose its fiscal second-quarter results early Wednesday. Analysts predict the semiconductor equipment vendor will earn 44 cents a share, down 10%, on sales of $211 million, up 3%.

XPeng (XPEV) reports early Wednesday. The embattled China EV startup should slightly narrow losses to 28 cents per share while sales drop 36%. More important might be updates on its important upcoming SUV and potential Model Y rival, the G6.

Thursday

Costco Wholesale (COST) reports its Q3 results late Thursday. FactSet projects earnings to surge 8.6% to $3.30 per share. Sales growth is seen slowing for the fourth straight quarter, increasing 3.8% to $54.6 billion.

Best Buy (BBY) is scheduled to release its fiscal first-quarter results early Thursday. Wall Street sees the consumer electronics retailer earning $1.11 a share, down 29%, on sales of $9.53 billion, down 11%.

Medtronic (MDT) is on deck to report its fiscal fourth-quarter earnings before the stock market opens on Thursday. Analysts polled by FactSet expect the company to earn an adjusted $1.55 per share on $8.26 billion in sales, up 2% each.

Workday (WDAY) reports Q1 earnings after the market close May 25. Analysts estimate EPS of $1.12, up 26%. Revenue is expected to grow 16% to $1.67 billion.

Analysts expect off-price retailer Dollar Tree (DLTR) earnings to tumble 35.9% to $1.52 per share for its Q1 report early Thursday. Revenue is projected to climb 5.5% to $7.28 billion. DLTR shares are consolidating with a 175.78 buy point.

Shoemaker Deckers Outdoor (DECK) reports its Q4 results late Thursday. Analysts expect earnings to jump 6.4% to $2.67 per share. Revenue is expected to dip 2% to $721 million, driven by a 22.9% drop in Ugg brand sales. Still, the spike in HOKA sales helped shares sprint nearly 20% this year, hitting an all-time high of 503.48 on May 10.

English Premier League soccer giant Manchester United (MANU) is expected to kick off Q3 earnings results Thursday. FactSet forecasts the Red Devils to report an adjusted loss of 5 cents per share, improving from a loss of 17 cents per share last year. Sales are projected to fall 11% to $170.8 million after broadcasting and matchday revenue dropped nearly 32% and 14%, respectively, in Q2. MANU shares are pulling back from their 2023 highs of 27.34 in February after rocketing in November on news that owners the Glazer family are seeking to sell the club.