The Dow Jones industrials shook off their three-week daze and advanced as the Nasdaq and S&P 500 punched higher. Entering the final week of February, the Nasdaq is up 5.5% for the month, just ahead of the S&P 500’s 5% gain. Small caps and midcaps have so far also had a good month. The Dow is only up 2.6% but, like its peers, is tacking toward a fourth straight monthly advance. Dow Jones stocks American Express (AXP), Disney (DIS) and Caterpillar (CAT) have all scored double-digit gains. Meanwhile, Intel (INTC) has lagged with a 10% decline.
X
In the coming week, Dell (DELL), Hewlett-Packard (HPE), eBay (EBAY) and Dow Jones industrial component Salesforce.com (CRM) are some of the headline names on the earnings calendar.
Stocks To Watch: Five Stocks Near Buy Points
After the stock market’s long, healthy rally, quality stocks setting up or flashing buy signals are in short supply. But TechnipFMC (FTI), Vertex Pharmaceuticals (VRTX), Lennar (LEN), Royal Caribbean (RCL) and Manhattan Associates (MANH) make the cut. TechnipFMC arguably is actionable after an earnings-fueled rally, though a handle would be nice. Lennar is pounding away at a buy point in a traditional flat base near key support. Royal Caribbean is in a messy flat base with a possible early entry. Vertex Pharmaceuticals is rebounding from its 10-week moving average, and Manhattan Associates from its 21-day exponential moving average, both following base breakouts.
Economic Calendar: The Fed’s Key Inflation Gauge
Inflation data again takes center stage in the coming week, with the Fed’s primary inflation rate on Thursday. The core PCE price index is seen rising a hefty 0.35% on the month, according to the FactSet survey, up from 0.2% the prior month. That would still lower the 12-month core inflation rate to 2.8% from 2.9%. The overall PCE price index, including food and energy, is seen up 0.34% from December and 2.4% from a year ago. The inflation data is part of the Commerce Department’s personal income and outlays report, which adds spending on services to the previously released retail sales data. Deutsche Bank economists expect spending to have risen just 0.1% on the month as incomes grew 0.5%.
Fed Minutes: Stock Prices Becoming An Inflation Threat; S&P 500 Rises
Fourth-quarter GDP growth, initially estimated at 3.3%, will get its first revision on Wednesday at 8:30 a.m. The FactSet consensus is 2.8%. The report also could see revisions to the core PCE price index for Q4. Among other notable releases, the ISM manufacturing survey index is out Friday at 10 a.m. and durable goods orders on Tuesday at 8:30 a.m. Housing releases include new home sales on Monday, the Case-Shiller price index on Tuesday and pending home sales on Thursday.
Dow Jones: Salesforce Growth Seen Slower, But Still Strong
Big cap software developer Salesforce reports Q4 earnings on Wednesday. But Wall Street does not expect material revenue contribution of “generative” artificial intelligence product upgrades until late 2024. Analysts project adjusted EPS growth of 35% to $2.27. Salesforce revenue will climb 10% to $9.22 billion, analysts estimate. One key financial metric is current remaining performance obligations. In Q4, analysts expect 11% CRPO growth to $27.095 billion. Salesforce has refocused on operating margins amid cost-cutting spurred by activist investors. Salesforce stock gained nearly 98% in 2023. In 2024, CRM stock has gained nearly 12%.
Computer Hardware: An AI lift for more techs?
Dell Technologies and Hewlett Packard Enterprise release quarterly results late Thursday. Investors will watch to see if the enterprise computer makers benefit from the AI-fueled data center spending boom. Analysts expect Dell to earn $1.73 a share, down 4%, on sales of $22.16 billion, down 11%, in Q4. HPE is seen earning 45 cents a share, down 29%, on sales of $7.1 billion, down 9%, in its fiscal first quarter. Dell, after positive analyst notes Friday, is up almost 30% from a November breakout. PC and printer maker HP (HPQ) will post its fiscal Q1 results late Wednesday.
Beyond The Big Dow Jones Retailers
Most of the biggest retailers have reported, but the coming week features an array of smaller, but important names. Best Buy (BBY), TJX (TJX) and Ross Stores (ROST), Advance Auto Parts (AAP) and AutoZone (AZO), Urban Outfitters (URBN), and Domino’s Pizza (DPZ) all report. Expectations are mixed, with positive forecasts for TJX, Ross and AutoZone. All trade at or near new highs. Views call for a 114% EPS gain for Urban Outfitters, which just cleared a 32-month high. Advance Auto earnings are seen plunging 92%.
A Check In On Food Inflation
The hot topic of food-price inflation will receive some updates during the week ahead. Hormel (HRL), a leading provider of pork and turkey, also owns the Planters, Dinty Moore and Skippy brands. Pilgrim’s Pride (PPC) is a top producer of chicken, a key price gauge — particularly following a brutal outbreak of avian flu in 2022. Pilgrim’s Pride reports Monday and Hormel on Thursday. Analysts see PPC earnings popping back from a loss last year. Hormel sales and earnings are expected to slip. Pilgrim’s Pride on Friday traded just below a buy point in a six-week flat base.
Earnings Briefs
Monday
Workday (WDAY) reports Q4 earnings after the market close Monday. Analysts expect adjusted earnings to rise 53% to $1.47 per share. The enterprise software maker targets a 16% revenue gain to $1.92 billion. Billings are expected to grow 15% to $2.77 billion. The maker of human capital management software is up 21% from a December breakout.
Tuesday
Splunk (SPLK) reports Q4 earnings Tuesday. The software maker’s $28 billion acquisition by Cisco Systems (CSCO) is expected to close by this summer. For Q4, analysts project a 2% drop in adjusted EPS to $1.98. Revenue is expected to climb 3% to $1.29 billion. Given the pending acquisition by Cisco, Splunk will likely not issue 2024 guidance.
EBay (EBAY) will report fourth-quarter earnings Tuesday. Wall Street expects a slight earnings decrease, to $1.03 per share, despite a 5% increase in sales to $2.5 billion. The company faces challenges from Amazon, Walmart and upstarts Temu and Shein. Shares are back above key support in a seven-month base.
Wednesday
Sarepta Therapeutics (SRPT) delivers its Q4 results late Wednesday. Analysts polled by FactSet expect Sarepta to lose 1 cent a share on $387 million in sales. Losses would narrow year over year while sales grow 50%. Shares are up 145% from an October low, but still below May 2023 highs.
Thursday
Veeva Systems (VEEV) plans to report fourth-quarter earnings late Thursday. Wall Street expects Veeva to earn an adjusted $1.30 per share and report $621 million in sales. Earnings would increase 13% as sales climb more than 10%. Shares are less than 2% below a cup-base buy point.
Autodesk (ADSK) will post its fiscal Q4 results late Thursday. Analysts predict the design software maker will earn $1.95 a share, up 5% year over year, on sales of $1.43 billion, up 9%. Shares are up nearly 20% from a November breakout.
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