Walmart, Home Depot, And Alibaba Earnings Put Retail On The Hot Seat

Summary:

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All eyes will be on the July inflation report and retail sales update as key releases that arrive just a little bit more than a week ahead of the Federal Reserve’s Jackson Hole symposium on August 22-24. There has been a heightened focus on U.S. recession risk in the market since the Sahm Rule was triggered when the three-month moving average of the unemployment rate rose by 0.5% relative to its low point during the prior 12-month period. While the Sahm rule has a perfect track record over time, Seeking Alpha Investing Group Leader Lawrence Fuller thinks it is sending a false positive, due to post-pandemic anomalies in the economic data. Federal funds trading currently implies almost an equal probability for a 25-point or 50-point rates cut at the September meeting of the policymaking committee.

The earnings calendar for the week ahead is headlined by retail heavyweights Walmart (NYSE:WMT) and Home Depot (HD). Seeking Alpha analyst Uttam Dey previewed that expectations are clearly running high on Walmart, and markets may even be hoping for a beat-and-raise guidance. He thinks that if the retail giant is conservative with its guidance, Walmart’s (WMT) stock would stay range-bound for a few months. Other notable reporters include Cisco (CSCO), Alibaba (BABA), Applied Materials (AMAT), Deere (DE), JD.com (JD), and Tapestry (TPR).

Earnings spotlight: Monday, August 12 – Barrick Gold (GOLD), monday.com (MNDY), and Rumble (RUM). See the full earnings calendar.

Earnings spotlight: Tuesday, August 13 – Home Depot (HD), Tencent Music (TME), and On Holding (ONON). See the full earnings calendar.

Earnings spotlight: Wednesday, August 14 – UBS Group (UBS), Cardinal Health (CAH), Brinker International (EAT), and Cisco (CSCO). See the full earnings calendar.

Earnings spotlight: Thursday, August 15 – Walmart (WMT), Alibaba (BABA), Applied Materials (AMAT), Deere (DE), JD.com (JD), and Tapestry (TPR). See the full earnings calendar.

Volatility watch: Options trading volume is elevated on Black Diamond Therapeutics (BDTX) and Trump Media & Technology (DJT). The most overbought stocks per their 14-day relative strength index include Investcorp India Acquisition (IVCA), G1 Therapeutics (GTHX), and Kellanova (K). The most oversold stocks per their 14-day Relative Strength Index include Pinterest (PINS), Snap (SNAP), and ODP Corp. (ODP). Short interest has moved higher on Spirit Airlines (SAVE) and Cassava Sciences (SAVE).

IPO watch: YXT.COM Group Holding (YXT) is the only company expected to launch an IPO in the U.S. next week. The Chinese cloud-based digital corporate education platform business is looking to raise $50M. IPO quiet periods expire on Ardent Health Partners (ARDT), TWFG (TWFG), and Artiva Biotherapeutics (ARTV) to free up analysts to post ratings. The IPO lockup period expires for blocks of shares of Sacks Parente Golf (SPGC) and Chromocell Therapeutics (CHRO).

Dividend watch: Companies that have an ex-dividend date coming next week include Alcoa (AA), ConocoPhillips (COP), Eli Lilly (LLY), and Diamondback Energy (FANG). Companies forecast to increase their quarterly dividend payouts include Tapestry (TPR) to $0.40 from $0.35, H&R Block (HRB) to $0.34 from $0.32, and Winnebago (WGO) to $0.32 from $0.31. Read through some of the dividend stock picks from Seeking Alpha analysts.

CPI preview: Economists forecast the Consumer Price Index will firm to a 0.3% month-over-month pace, following a downside surprise in June. The expected rise is being primarily attributed to a pickup in core services inflation and energy prices, maintaining the year-over-year rate at 3.0%. Core CPI is anticipated to increase by 0.2% month-over-month, aligning with the Federal Reserve’s benchmark for potential rate cuts in September. The modest reversal in core CPI is driven by core services inflation, particularly in non-housing services and shelter prices, which are expected to rise by 0.3% month-over-month. Core goods prices are projected to decline for the fifth consecutive month due to falling vehicle prices, though there are upside risks from higher shipping costs. If the July CPI aligns with expectations, it could support the Fed’s plan to begin rate cuts in September, despite financial markets anticipating more aggressive cuts. Ahead of the report, BNP Paribas said it sees risks as roughly balanced and pertaining to shelter, with a potential bounce-back in Western OER on the upside and a weaker-than-expected all-tenant rent index suggesting room for downside. The firm thinks the report will boost the Fed’s confidence that inflation is headed back to 2%.

Investor events: Progyny (NASDAQ:PGNY) will host the first Investor Day event in the company’s history. The three-day Ai4 Conference will also take place. Chegg (CHGG), Amazon (AMZN), Wells Fargo (WFC), Medtronic (MDT), and DICK’S Sporting Goods (DKS) are some of the companies participating in the conference that covers AI and machine learning innovation in business. Google (NASDAQ:GOOG) (GOOGL) will hold its annual Pixel hardware event at the company’s headquarters in Mountain View, California. The company is expected to show off the Pixel 9 and a Pixel 9 Pro Fold. Illumina (ILMN) will present a strategy update. The event will feature presentations by members of Illumina’s executive team and conclude with a Q&A session. Finally, Super Micro Computer (NASDAQ:SMCI) will begin its highly anticipated Fourth Annual Open Storage Summit. The three-week summit includes a roundtable keynote session, followed by five focus sessions that showcase influential guests from companies such as Intel (INTC), AMD (AMD), NVIDIA (NVDA), Micron (MU), Samsung (OTCPK:SSNLF), and Japanese chipmaker Kioxia.

Robotaxi watch: Tesla (TSLA) was originally scheduled to be at the center of the autonomous driving universe during the week. CEO Elon Musk first announced the robotaxi event for August 8, but later pushed the timing back to October 10. Tesla (TSLA) has been talking about a robotaxi concept since 2016, but the event itself is supposed to give a clear indication of the shape and form of the autonomous vehicle business. Musk had reportedly ordered design alterations to the autonomous vehicle that will be unveiled. The robotaxi event could also clear up conflicting reports on how meaningful the latest version of Tesla’s (TSLA) FSD system. Some users have raved about the latest FSD features and Tesla (TSLA) has said that it now has 1.6 billion miles driven using FSD (supervised) as it laps the competition in data collected. Meanwhile, Truist Securities recently reported back on what it said was a test drive of Tesla’s (TSLA) updated version of its autonomous driving software. Analyst William Stein said the new version was impressive, but does not solve autonomy. “The shortcomings that we observed make it challenging to imagine what TSLA will reveal in its RoboTaxi event in October,” highlighted Stein. The robotaxi concept is not unique to Tesla (TSLA). Companies such as Waymo (GOOG), Amazon’s (AMZN) Zoox, and Baidu’s (BIDU) Apollo, General Motors’ (GM) Cruise, and Motional (APTV) (OTCPK:HYMTF) are all going down the autonomous vehicle road at varying paces. Just this week, Waymo expanded its robotaxi coverage in Los Angeles and San Francisco. Notably, Waymo has operated a commercial service 24 hours a day, seven days a week throughout the city of San Francisco since receiving approval from the commission in August 2023. Parent Alphabet (GOOG) chose to commit to a new multi-year investment of $5 billion in Waymo. “This new round of funding, which is consistent with recent annual investment levels will enable Waymo to continue to build the world’s leading autonomous driving technology company,” highlighted Alphabet CIO Ruth Porat during the recent earnings call. Meanwhile, the Zoox autonomous ride-hailing service is closing in on welcoming its first public riders in Las Vegas. For its part, Zoox has Nvidia (NVDA) as a major partner. “The world has never seen a robotics company like this before,” stated Nvidia CEO Jensen Huang on the Zoox robotaxi development. Zoox uses NVIDIA GPUs and software tools to run a wide array of simulations, testing its autonomous systems in virtual environments before real-world deployment. Uber Technologies (UBER) and Lyft (LYFT) are firmly in the mix of companies looking to scale a robotaxi fleet. “Uber is uniquely positioned to offer tremendous value for AV players looking to deploy their technology at scale,” stated Dara Khosrowshahi on the company’s recent earnings call (transcript). “While the operation of a ride hail network may seem simple, our technology obscures a huge amount of complexity,” he noted. Lyft (LYFT) made similar remarks during its Q2 earnings call (transcript) about the enormous opportunity that autonomous vehicles may present for the company. In one of the biggest developments of the year for the ridesharing industry, Uber (UBER) and Chinese electric vehicle giant BYD Company (OTCPK:BYDDF) announced that they are collaborating to build a global robotaxi fleet. As part of the partnership, Uber (UBER) plans to add more than 100,000 BYD vehicles over the next few years. The expansion will center on Europe before moving to Latin America, the Middle East, and North America.