Earnings will drive the market next week — what we expect from 2 portfolio stocks

6 May 2024

CNBC

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Earnings will drive the market next week what we expect from 2 portfolio
stocks

Without any major economic reports, earnings — especially forward guidance and management commentary — will drive the action.

Is the stock market rally here to stay after April's terrible month? With the Fed, Apple earnings and the jobs report passing with flying colors this week, the runway to more gains looks a lot less cluttered. The main economic update came Friday in the form of a weaker-than-expected April nonfarm payrolls growth. With the market forced to accept that the Federal Reserve will keep interest rates higher for longer, as telegraphed after this week's central bank meeting, the jobs report was welcome news — still decent hiring and slightly cooler wage inflation. That's what Wall Street was hoping for because it goes along with what Fed Chairman Jerome Powell said Wednesday afternoon. He stressed rates would likely remain at current levels until central bankers gained confidence that inflation was on its way down to their 2% target. He also said the Fed's rate next move, when it does come, will most likely be a cut. The positive for Main Street was that wage growth was still above the rate of inflation as indicated by the core PCE index, the Fed's favorite price measure. While we're seeing some consumers trade down to cheaper goods and increased price sensitivity when it comes to discretionary purchases, we're not seeing the kind of pain that would derail the path to a soft economic landing, or no landing as Jim Cramer has posited. With the Fed and jobs overhangs removed from the market, Apple's better-than-feared quarter was icing on the cake. China was not the problem that so-called "channel check" had made it out to be. In addition to a quarterly revenue beat on record services , Apple issued a $110 billion stock buyback, the biggest in corporate history. It wasn't long ago that Jim thought Apple could go to $160 per share. But through it all, he said, "Own it, don't trade it." That makes Friday's 7% stock gain to $185 even more sweet. The Club raised its price target on Apple to $220 from $205. This past week was chock full of Club earnings: 12 portfolio companies, including Apple , delivered results. The others were Eaton , GE Healthcare , Eli Lilly , Amazon , Starbucks , Estee Lauder , DuPont , Linde , Stanley Black & Decker , Bausch Health , and Coterra Energy . More broadly, 80% of S & P 500 companies have now reported. According to data compiled by FactSet, three-quarters of them were positive earnings surprises, with two-thirds issuing positive sales surprises. It's too early to tell if the old Wall Street adage "sell in May and go away" proves true. Without any major economic reports, earnings — especially forward guidance and management commentary — will drive the action. For the Club, Disney and Wynn Resorts will report results Tuesday. Disney is expected to earn $1.10 per share for its fiscal second quarter of 2024, which would be about 18% higher than last year. Revenue estimates for $22.11 billion are looking relatively flat. In addition to any updates CEO Bob Iger can share on cost-cutting and efficiency efforts, we will closely monitor streaming dynamics. We want to see that the streaming business is on track to report its first profitable quarter by the end of the fiscal year 2024 and the trajectory beyond fiscal 2024. Iger will be fresh off Disney's victory over activist investor Nelson Peltz, who lost his fight for board seats on April 3. Since then the stock has dropped about 7%. On April 4, after Peltz and Iger were on CNBC, Jim said the Club would trim our position were we not restricted. Shares were around $120 when our commentary went out . When we were free to book our trade on April 15, we had to sell at $114. We're glad members got a better price. Analysts expect Wynn's earnings per share of $1.27 versus 29 cents a year ago when China was not fully back from Covid. Revenue is seen increasing by about 26% to $1.79 billion. Las Vegas Sands last month missed quarterly expectations due to weakness in Macao. Part of that was LVS renovations at the Londoner resort and Cotai Arena. That renovation lasted through the Chinese New Year. However, with LVS management noting that the Macao market is still in growth mode, we're interested to see if LVS's pain was Wynn's gain. Wynn's Las Vegas operation is expected to be down sequentially but should still be up year-over-year. Boston is expected to be slightly lower sequentially, and versus the year-ago period. Monday, May 6 Before the bell: Spirit Airlines (SAVE), Krystal Biotech (KRYS), Berkshire Hathaway (BRK.B), Alpha Metallurgical Resources (AMR), Axsome Therapeutics (AXSM), BioNTech SE (BNTX), Tyson Foods (TSN), Bowlero Corp. (BOWL), CNA Financial Corp. (CNA), Jones Lang LaSalle Incorporated (JLL) After the bell: Palantir Technologies (PLTR), Symbotic (SYM), Realty Income Corp. (O), Lucid Group (LCID), Hims & Hers Health (HIMS), Rocket Lab USA (RKLB), Axon Enterprise (AXON), Teradata Corp (TDC), Coherent (COHR), Microchip Technology (MCHP), FMC Corporation (FMC), Paymentus Holdings (PAY), Shockwave Medical (SWAV), Vertex Pharmaceuticals (VRTX), AECOM (ACM), Fabrinet (FN), Goodyear Tire & Rubber Company (GT), Simon Property Group (SPG), Sterling Construction Company (STRL), Apple Hospitality REIT (APLE), Boise Cascade Corporation (BCC), BellRing Brands (BRBR), Coty (COTY), EverQuote (EVER), Fidelity National Information Services Inc (FIS), Matterport (MTTR), Vornado Realty Trust (VNO) Tuesday, May 7 Before the bell: Walt Disney Co (DIS), Celsius Holdings (CELH), Datadog (DDOG), Crocs (CROX), Madrigal Pharmaceuticals (MDGL), Nikola Corporation (NKLA), Ferrari N.V. (RACE), BP p.l.c (BP), Rockwell Automation (ROK), MarketAxess Holdings (MKTX), Jumia Technologies AG (JMIA), GEO Group (GEO), Builders FirstSource Inc (BLDR), WK Kellogg (KLG), Duke Energy Corp. (DUK), Kenvue (KVUE), GlobalFoundries (GFS) After the bell: Wynn Resorts (WYNN), Rivian Automotive (RIVN), Arista Networks (ANET), Upstart Holdings (UPST), Wynn Resorts ltd (WYNN), Lyft (LYFT), Occidental Petroleum Corp. (OXY), Twilio (TWLO), Toast (TOST), Confluent Inc (CFLT), Astera Labs (ALAB), Dutch Bros (BROS), Coupang (CPNG), Flywire Corporation (FLYW), B2Gold Corp. (BTG), Kinross Gold Corp. (KGC), Virgin Galactic Holdings (SPCE), Match Group (MTCH), iRobot Corp (IRBT), Electronic Arts Inc (EA), Reddit (RDDT), McKesson Corp. (MCK), TripAdvisor (TRIP) Wednesday, May 8 Before the bell: Uber Technologies (UBER), Shopify (SHOP), Affirm Holdings (AFRM), ACM Research (ACMR), Avadel Pharmaceuticals plc (AVDL), Toyota Motor Corp. (TM), Emerson Electric Co. (EMR), Perion Network (PERI), Editas Medicine (EDIT), Autohome (ATHM), Brink's Company (BCO), HF Sinclair Corporation (DINO), 1stdibs.com (DIBS), New Fortress Energy LLC (NFE), Vishay Intertechnology (VSH), Starwood Property Trust Inc (STWD), Elanco Animal Health Incorporated (ELAN), Village Farms International (VFF), IM Cannabis Corp. (IMCC), Fox Corporation (FOXA), Formula One Group (FWONK), Icahn Enterprises L.P. (IEP), Teva Pharmaceutical Industries (TEVA) After the bell: Arm Holdings plc (ARM), Airbnb (ABNB), Robinhood Markets (HOOD), AMC Entertainment Holdings (AMC), Trade Desk (TTD), Beyond Meat (BYND), Energy Transfer LP (ET), AppLovin Corporation (APP), Exact Sciences Corp. (EXAS), Duolingo (DUOL), Sunrun (RUN), Magnite (MGNI), SolarEdge Technologies (SEDG), Instacart (CART) Thursday, May 9 8:30 a.m. ET: Initial Jobless Claims Before the bell: Roblox Corporation (RBLX), GigaCloud Technology Inc (GCT), Warner Bros. Discovery (WBD), Medical Properties Trust Inc (MPW), Sundial Growers (SNDL), Plug Power (PLUG), Constellation Energy Group (CEG), Cronos Group (CRON), Fiverr International (FVRR), Viatris (VTRS), Canadian Solar Inc (CSIQ), EPAM Systems (EPAM), Cedar Fair Entertainment Company (FUN), Planet Fitness (PLNT), Tapestry (TPR) After the bell: Marathon Digital Holdings (MARA), SoundHound AI (SOUN), CleanSpark (CLSK), Unity (U), RCI Hospitality Holdings (RICK), Guardant Health (GH), Akamai Technologies (AKAM), Array Technologies Inc (ARRY), Blink Charging Co. (BLNK), indie Semiconductor (INDI), Insulet Corp. (PODD), NuScale Power Corporation (SMR), Ginkgo Bioworks Holdings (DNA), JFrog (FROG), Sweetgreen (SG), Bloom Energy Corporation (BE), Docebo (DCBO), H & R Block (HRB) Friday, May 10 Before the bell: Enbridge (ENB), DigitalOcean (DOCN), Construction Partners (ROAD), AMC Networks Inc (AMCX), CRH Public Ltd. Company (CRH) (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Bob Iger, chief executive officer of The Walt Disney Co., attends the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, US, on Tuesday, July 11, 2023.

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