Stock Market Investing Action Plan: Jackson Hole, Nvidia, Toll Brothers, Chip Stocks

The Nasdaq undercut its short-term 10-day moving average for the first time since late July, while the Dow industrials gave up support at the 200-day level. But the Nasdaq’s first weekly drop since mid-July is only a minor red flag for the stock market, as it finished the week a little more than 1% from a test of support at its 21-day exponential moving average. With chipmakers recovering ground, Nvidia’s report is likely to be a highlight of the week. Housing data and Toll Brothers earnings will also be closely watched, before Friday’s finale with a Jerome Powell speech in Jackson Hole.

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Stocks To Watch: 5 Chip Stocks Near Buy Points

The stock market’s pause over the last week gave a number of recovering chip stocks the change to complete handles after racing up the right side of bases.

Fed Watch: The Message From Jackson Hole

Federal Reserve chief Jerome Powell headlines the week’s economic news with his 10 a.m. speech on Friday at the central bank’s annual Jackson Hole symposium. The big question: Will Powell try to undo the dovish impression he gave at his July 27 news conference, which helped fuel a stock market rally? Perhaps the biggest downer, in the eyes of investors, would be if Powell talks about the lessons learned from the Fed’s failures in the 1970s. Reversing rate hikes too early back then as unemployment started to rise led to a quick and sustained resurgence in inflation. But don’t expect doom and gloom. Powell will likely stick to his view that the Fed can engineer a relatively soft landing for the U.S. economy. Powell won’t likely settle the question of how big a rate hike will come on Sept. 21. The Fed won’t prejudge, waiting to see up-to-date jobs and inflation data.

Stock Market Calendar: GDP Update, Consumer Spending, Home Sales

Economic data in the coming week will feature the government’s second estimate of Q2 GDP on Thursday at 8:30 a.m. ET. The initial estimate that GDP fell 0.9%, following Q1’s 1.6% decline, slapped an unofficial recession label on the U.S. economy. Still, most economists expect Q3 to show positive growth as the pullback in gas prices revives spending in inflation-adjusted terms. Friday’s July personal income and spending report, out at 8:30 a.m., will give an early look at Q3 consumption. The report also will update the Fed’s preferred inflation gauge, which has some key differences from the consumer price index and tends to run a little lower. Also on tap, more downbeat housing news. The new home sales report comes out 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 Wednesday at 10 a.m. With the housing sector in reverse, the economy is leaning more on business equipment investment. The durable goods orders report out Wednesday at 8:30 will show the latest trend.

Retail Earnings: Trickle-Down Inventories

Department stores Macy’s (M) and Nordstrom (JWN) report quarterly earnings on Tuesday, with results from dollar stores Dollar General (DG) and Dollar Tree (DLTR), due out Thursday. The results come as higher grocery and gas prices make spending on clothing more difficult. Wall Street expects Macy’s to earn 86 cents per share, down 33%, as revenue slips 3% to $5.49 billion. Analysts expected Nordstrom’s earnings to jump 63% to 80 cents, on sales up 8% to $3.963 billion. They saw Dollar General’s EPS up 9% to $2.94, with revenue up 9% to $9.393 billion. Estimates for Dollar Tree were for EPS of $1.59 and revenue of $6.797 billion.

Real Estate Market: The Housing Depression Arrives

Luxury homebuilder Toll Brothers (TOL) wraps up the last of the big homebuilder reports late Tuesday. The report will come just a week after the National Association of Home Builders officially called a housing recession, following the release of August data showing builder confidence for single-family housing below the critical break point of 50. Buyer traffic fell to the worst level since April 2014, aside from a brief dip lower in early 2020. Forecasts put Toll Brothers EPS at $2.30, up 23%. The revenue target is $2.51 billion, up 11.4%. Prices and cancellations will be key, with NAHB reporting 20% of builders lowered prices in Q2 in order to avoid cancellations. 

China Economy: A Look At Retail Sales, Consumer Spending

JD.com (JD) reports quarterly results early Tuesday, which should provide insight into China’s retail markets and consumer sentiment following disappointing official retail sales data for July. Analysts expect JD.com to report adjusted income of 41 cents a share, down 10% from the year-ago period on revenue of $38.7 billion, down 1% and a sharp slowdown from consistent double-digit growth in recent years. It would be JD’s first quarterly decline. JD competes primarily against Alibaba (BABA), with the two being the largest e-commerce companies in China. Alibaba reported earnings early this month that beat expectations while indicating business conditions improved in June. Like JD, however, Alibaba also posted its first quarterly revenue decline. JD and Alibaba have been hurt by sporadic Covid shutdowns in China, a harsh regulatory condition and weaker than expected macroeconomic conditions. China retail sales rose 2.7% in July from a year earlier but below the 5% growth that was forecast by Reuters. But online sales of physical goods in July rose 10% year on year, faster than in June, according to CNBC calculations of official data.

Stock Market Earnings Briefs

Monday:

Palo Alto Networks (PANW) reports fiscal Q4 earnings late Aug. 22. The cybersecurity firm’s EPS is expected to rise 42% to $2.20. Revenue will climb 26% to $1.54 billion, analysts project. Palo Alto’s fiscal 2023 guidance will be key. Analysts model EPS of $9.23, up roughly 37%.

Nordson (NDSN) formed a 40-week cup base ahead of its earnings report Monday afternoon. Analysts expect less than 1% EPS and revenue growth to $2.44 and $651 million, respectively. 

Tuesday:

Xpeng (XPEV) reports second quarter results Tuesday before the stock market opens. Analysts expect a 32-cent loss per share and an 86% sales increase to $1 billion for the China-based electric-vehicle manufacturer.

 Advance Auto Parts (AAP) announces second quarter financials Wednesday morning. The automotive aftermarket product provider’s earnings are projected to grow 10% to $3.75 per share, according to FactSet. Wall Street expects revenue increased 4% to $2.7 billion in the second quarter.

Intuit (INTU) reports fiscal Q4 earnings late Aug. 23. Analysts expect the financial software company’s profit to fall 48% to $1.03, with revenue falling 8% to $2.34 billion. Guidance for fiscal 2023 will be key amid worries over a slowing economy and the impact on small- and medium-size businesses. The company hosts an investor day on Sept. 29.

Heico (HEI) broke out of its 79-day double-bottom base on July 29. HEI stock is beating resistance from its April high and trading just above its 10-day moving average as of Friday. The defense company reports quarterly results on August 29. Analysts expect 16% earnings growth to 65 cents per share and 17% revenue growth to $555 million for the quarter.

Medtronic (MDT) will report its fiscal first-quarter earnings early Tuesday. FactSet-polled analysts expect adjusted Medtronic earnings to sink about 21% to $1.12 per share. They also call for a 10% sales decline to $7.22 billion. Analysts will likely focus on the sales impact due to continued lockdowns in China as well as whether exchange rates have an effect on guidance.

Wednesday:

Nvidia (NVDA) reports Q2 earnings after Wednesday’s stock market close. Analysts project EPS of 49 cents, down 53% from a year earlier. The chipmaker preannounced some financials, including revenue of $6.7 billion. The company had guided to $8.1 billion in sales. Computer game machines revenue fell 44% in the quarter. Data center sales slipped 2%.

Salesforce (CRM) reports Q2 earnings late Wednesday. The enterprise software maker’s profit is expected to fall 30% to $1.03 per share. Revenue will rise 22% to $7.7 billion, including the acquisition of Slack Technologies, analysts project.

Box (BOX), which recently broke out from a cup-with-handle base, reports second-quarter results Wednesday morning. The business collaboration and content management cloud software company is expected to report earnings of 27 cents, up 29% from the year-ago period, on revenue of $245.3 million, up 14%. Box stock is up about 7%% since its breakout on Aug. 1.

Thursday:

Marvell Technology‘s (MRVL) second-quarter earnings are on deck for after the close Thursday. Analysts predict 65% earnings growth to 56 cents per share, on an adjusted basis. They estimate $1.52 billion in sales, up 41%.

Ulta Beauty (ULTA), a beauty retailer, reports second-quarter earnings on Thursday. Wall Street expects earnings per share of $4.90, up 8%, on sales of $2.193 billion, an 11% gain. Shares are in a base.

Workday (WDAY) reports Q2 earnings after the stock market closing bell on Thursday. The enterprise software maker is expected to report EPS of 79 cents, down 36% from a year earlier. Revenue is projected to rise 20% to $1.52 billion.

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