Earnings Season Launches With Delta, PepsiCo, JPMorgan, And Citi Leading Off

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The major focus of the markets for the first full week of the third quarter will be the June CPI report and Federal Reserve Chairman Jerome Powell’s testimony to committees in the Senate and House. The CPI print is forecast to show a 0.1% month-over-month rise in inflation, while the annual core inflation rate is expected to be unchanged at 3.4%. Bank of America expects the June CPI report to be another confidence builder following the “undeniably good” May report. The firm noted that rent and owners’ equivalent rent increases should cool in the coming months, which should add to the Fed’s confidence in the inflation outlook. BNP Paribas highlighted that auto insurance and air fares could also trickle lower.

The earnings season officially begins with Delta Air Lines (NYSE:DAL) and PepsiCo (NASDAQ:PEP) heading into the earnings confessional, along with major banks such as Citigroup (C), JPMorgan Chase (JPM), and Wells Fargo (WFC). The event calendar includes Tyson Foods’ (NYSE:TSN) Demo Day for startups, Samsung’s (OTCPK:SSNLF) Unpacked Galaxy event, and the Allen Conference in Sun Valley. Meanwhile, the auto sector is expected to create more headlines as the battle between the European Union and Chinese electric vehicle companies ramps up and Hyundai (OTCPK:HYMTF) workers in South Korea threaten to strike. Tesla (TSLA) shares are also in the spotlight due to the recent spike after the company posted a better-than-feared Q2 deliveries report.

Earnings spotlight: Monday, July 8 – Greenbrier (GBX). See the full earnings calendar.

Earnings spotlight: Tuesday, July 9 – Helen of Troy (HELE) and Kura Sushi (KRUS). See the full earnings calendar.

Earnings spotlight: Wednesday, July 10 – Manchester United (MANU) and PriceSmart (PSMT). See the full earnings calendar.

Earnings spotlight: Thursday, July 11 – Delta Air Lines (DAL), PepsiCo (PEP), and Conagra Brands (CAG). See the full earnings calendar.

Earnings spotlight: Friday, July 12 – Citigroup (C), JPMorgan Chase (JPM), Bank of New York Mellon (BK), and Wells Fargo (WFC). See the full earnings calendar.

Volatility watch: Options trading volume is elevated on Faraday Future Intelligent (FFIE) and Conn’s (CONN). The most overbought stocks per their 14-day relative strength index include Spectral Capital (OTCPK:FCCN), Bio Essence (OTCPK:BIOE), and Simply Better Brands (OTCQB:SBBCF). The most oversold stocks per their 14-day Relative Strength Index include Thunder Power (AIEV), SolarEdge (SEDG), and Sonoco (SON). Short interest is high on Hertz Global (HTZ), Carvana (CVNA), and Cinemark Holdings (CNK) heading into next week’s action

IPO watch: There are no new IPOs expected to begin trading during the week. The IPO lockup period expires on a block of shares of Smith Douglas Homes (SDHC). The quiet period expires on Tempus AI (NASDAQ:TEM) to free up analysts to post ratings. At the time of publication, Tempus AI traded about 15% below where the IPO was priced.

Dividend watch: Companies that have an ex-dividend date coming next week include JPMorgan (JPM) and Progressive (PGR). The five stocks in the S&P 500 Index with the highest dividend yields are Ford Motor (F), Amcor (AMCR), Hasbro (HAS), Best Buy (BBY), and International Paper (IP). Read through some of the dividend stock picks from Seeking Alpha analysts.

Delta Air Lines earnings preview: Delta Air Lines (DAL) is due to report earnings on July 11. The airline company is looking to build off its strong financial results for Q1, when it delivered record revenue and earnings at the high end of its guidance. Heading into the report, Delta (DAL) CEO Ed Bastian has noted that demand for air travel remains strong, with the customer base in a healthy financial position and travel being a top priority. In general, Delta (DAL) continues to benefit from a premium consumer mix as a best-in-class operator, with diversified revenue and cash streams. Analysts are looking for Delta (DAL) to reiterate its 2024 guidance for EPS of $6.00 to $7.00 and free cash flow of $3 billion to $4 billion. A positive or negative surprise from Delta (DAL) with its guidance update could be a share price catalyst for the airline sector in general. Options trading implies a share price swing of 6% after Delta’s (DAL) report is dropped. Shares of Delta (DAL) fell 2.3% after the company’s last earnings report. United Airlines (UAL), Copa Holdings (CPA), and Alaska Air (ALK) are the three airline stocks that correlate the closest to Delta after its earnings report is released.

PepsiCo earnings preview: PepsiCo (PEP) will report Q2 earnings on July 11. Consensus estimates from analysts are for revenue of $22.7 billion to be disclosed, EPS of $2.16, adjusted operating margin of 17.6%, and adjusted EBITDA of $4.72 billion. Organic sales are seen rising by 3.0%, led by a strong performance in the Europe and Latin America regions. Volume is seen as being up 4.1% to offset a 1.1% decline in pricing. UBS noted that although the stock has largely traded sideways to start the year and the firm’s crowding analysis points to PepsiCo being a crowded long, conversations would suggest sentiment remains negative heading into results due to concerns about challenging U.S. trends. “We do not expect 2Q results to represent a meaningful positive catalyst, with many investors taking a wait-and-see approach whether top- and bottom-line trends can show improvement. However, longer-term, we see a path to improved performance from here, and view the current entry point as attractive,” updated the UBS analyst team. On Seeking Alpha, Empyrean Research is also cautious on PepsiCo (PEP) due in part to the continued overhang of GLP-1 and Russia risks.

Investor events: The five-day Allen Conference will take place in Sun Valley, Idaho, next week. The list of heavy-hitter invitees includes OpenAI CEO Sam Altman, Meta (META) CEO Mark Zuckerberg, Amazon (AMZN) Executive Chairman Jeff Bezos, Apple (AAPL) CEO Tim Cook, Salesforce (CRM) Marc Benioff, Uber Technologies (UBER) CEO Dara Khosrowshahi, Warner Bros. Discovery (WBD) CEO David Zaslav, and Airbnb (ABNB) CEO Brian Chesky. Some analysts think this year’s media mogul confab will generate more headlines than has been seen recently. The three-day SEMICON West conference will also take place. The event showcases the latest advancements in the microelectronics sector, covering electronic design automation, device fabrication, and final manufacturing, including assembly, packaging, and testing. Meanwhile, Samsung’s (OTCPK:SSNLF) next Galaxy Unpacked event will take place in Paris. Industry watchers expect to see new foldables and smartwatches unveiled, as well as the arrival of the Galaxy Ring smart ring. Also on the calendar, Tyson Foods (TSN) will hold its Demo Day 2024. The event offers startups an exclusive platform for potential partnership opportunities with Tyson. Selected startups could receive mentorship from Tyson Foods executives, access to pilot and testing programs, possible proof of concepts, and the potential for commercial partnerships. Other notable investor events include Chewy’s (CHWY) annual meeting and Axcelis Technologies’ (NASDAQ:ACLS) Investor Day.