Investors Prep For High-Stakes Week After Tech Stocks Crumble

Summary:

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Investors face a test of nerves next week after key stock averages sold off Friday, with the Nasdaq Composite (COMP:IND) sliding into a correction after the July jobs report stoked fears the U.S. economy is headed toward a recession and the Federal Reserve is behind the curve in cutting interest rates. Key U.S. stock indexes managed to finish off session lows. The Nasdaq Composite (COMP:IND) fell 2.4%, and the S&P 500 (SP500) shed 1.8%. The Dow Jones Industrial (DJI) declined 1.5% for its worst daily percentage loss since May 23. Economic data releases next week include the ISM services index for July and the international trade balance for June. Federal Reserve members will be back on the speech circuit, and the central bank will also release the closely watched Senior Loan Officer Opinion Survey on bank lending practices.

The pace of corporate earnings slows down, but big names such as Caterpillar (CAT), Airbnb (ABNB), and Disney (NYSE:DIS) will report. In the healthcare sector, Novo Nordisk (NVO), which manufactures Ozempic and Wegovy, and the company that manufactures Zepbound and Mounjaro, Eli Lilly (LLY), both step into the earnings confessional.

Earnings spotlight: Monday, August 5 – CSX Companies (CSX), Williams Companies (WMB), Tyson Foods (TSN), and Carlyle Group (CG). See the full earnings calendar.

Earnings spotlight: Tuesday, August 6 – Amgen (AMGN), Caterpillar (CAT), Uber Technologies (UBER), Airbnb (ABNB), Duke Energy (DUK), Celsius Holdings (CELH), and Yum! Brands (YUM). See the full earnings calendar.

Earnings spotlight: Wednesday, August 7 – Disney (DIS), McKesson (MCK), CVS Health (CVS), Hilton Worldwide (HLT), Shopify (SHOP), and Fastly (FSLY). See the full earnings calendar.

Earnings spotlight: Thursday, August 8 – Eli Lilly (LLY), Gilead Sciences (GILD), Expedia (EXPE), Take-Two Interactive (TTWO), Paramount Global (PARAA), and Datadog (DDOG). See the full earnings calendar.

Earnings spotlight: Friday, August 9 – AMC Networks (AMCX) and American Axle (AXL). See the full earnings calendar.

Volatility watch: Options trading volume is elevated on Lumen Technologies (LUMN) and TeraWulf (WULF) ahead of their earnings reports. The most overbought stocks per their 14-day relative strength index include Lumen Technologies (LUMN), Enova International (ENVA), and Inspirato (ISPO), The most oversold stocks per their 14-day Relative Strength Index include CrowdStrike (CRWD) and Five Below (FIVE). Short interest has moved higher on Dave (DAVE) and Forward Air (FWRD).

IPO watch: No new IPOs are expected to start trading next week. IPO lockup periods expire on blocks of shares of BBB Foods (NYSE:TBBB), Metagenomi (MGX), and Telomir Pharmaceuticals (NASDAQ:TELO).

Dividend watch: Companies forecast to increase their quarterly dividend payouts include Badger Meter (BMI) to $0.32 from $0.27, Warner Music (WMG) to $0.18 from $0.17, and Ingredion (INGR) to $0.80 from $0.78. Read through some of the dividend stock picks from Seeking Alpha analysts.

Investor events: The KeyBanc Capital Markets Technology Leadership Forum will include participation from Check Point Software (CHKP), Arista Networks (ANET), Simulations Plus (SLP), Cogent Communications (CCOI), and Blackberry (BB). Executives with Google (GOOG) and Microsoft (MSFT) will give keynote addresses at the Black Hat USA 2024 Conference. The National Transportation Safety Board will hold a two-day hearing on its investigation into how and why a door plug departed from a Boeing (NYSE:BA) 737-9 MAX passenger jet during a flight operated by Alaska Airlines (ALK). The J.P. Morgan Auto Conference will feature appearances by Aptiv (APTV), AEye (LIDR), Gentherm (THRM), and Cooper-Standard (CPS).

Election watch: The U.S. election is burning brighter with investors after the calendar turned to August. Bank of America said the big themes in the next few months will be how to assess the impact on stocks of changes to trade policy, immigration, and regulation. The firm thinks the rhetoric from both parties leans toward fiscal policy that is geared toward higher deficits. “We think the next President will continue to favor trade policies that realign U.S. relations away from rivals and prioritize advancing U.S. leadership in high-tech industries, but there are implementation risks,” updated BofA. Aggressive tariff hikes and tighter immigration are both seen weakening growth if Republicans take full control of Congress, while a move towards a less regulated economy is noted to be a positive for business and market sentiment. Bank of America thinks a divided government is the scenario with the least amount of risk for investors.