Investors Balance Rate Elation Against Economic Worries

Summary:

Global growth will be a major focus next week for the markets, with the September flash PMIs due to be reported. In the U.S., the core PCE report will be released at the end of the week. The Federal Reserve’s preferred inflation gauge rose 2.6% year-over-year in both July and June. Fresh off the first interest rate cut in more than four years, FOMC members will be back on the speaking circuit, including Chairman Jerome Powell. Amid all the investor focus on the Fed’s rate cuts, Seeking Alpha Investing Group Leader Envision Research noted that the timing and degree of the cuts are still an art rather than a science at this stage “To make things more uncertain, monetary policy, including interest rate cuts, can have a lag time before the impacts are felt in the real economy.”

The earnings calendar in the week ahead includes reports from Micron (MU), AutoZone (AZO), and Costco (NASDAQ:COST), while the event calendar is headlined by Meta Platforms’ (META) annual Meta Connect event. Analysts think that there could still be some spillover from FedEx’s (FDX) worrying guidance update. Another trend for investors to consider is that the week after the September rush of options expirations on triple witching day is historically among the weakest of the year as portfolio managers adjust from their summer vacation slumber.

Earnings spotlight: Tuesday, September 24 – AutoZone (AZO), KB Home (KBH), Thor Industries (THO), and Stitch Fix (SFIX) See the full earnings calendar.

Earnings spotlight: Wednesday, September 25 – Micron Technology (MU) and Jefferies (JEF). See the full earnings calendar.

Earnings spotlight: Thursday, September 26 – Costco Wholesale (COST), Accenture (ACN), Jabil (JBL), and CarMax (KMX).See the full earnings calendar.

Volatility watch: Options trading volume is elevated on (LUNR) and (AZUL). The most overbought stocks per their 14-day relative strength index include Eton Pharmaceuticals (ETON), Primega Group (PGHL), and Immuneering (IMRX). The most oversold stocks per their 14-day Relative Strength Index include BioMarin (BMRN), Integra LifeSciences (IART), and Applied Energetics (OTC:AERG). Short interest is elevated on Verve Therapeutics (VERV) and ALX Oncology Holdings (ALXO).

IPO watch: BKV Corporation (BKV) is expected to price its IPO and start trading in the week ahead. The Denver-based company is described as one of the largest natural gas producers in the Barnett Shale. Healthcare-related Legacy Education (LGCY) is also on the calendar to make its public debut. The California-based company is offering 5M shares in an expected range of $5 to $7. Guardian Pharmacy Services (GRDN) is also set to price its IPO and begin trading. The Atlanta-based company focuses on providing outsourced pharmacy services to long-term healthcare facilities, targeting assisted living, skilled nursing, and behavioral health facilities. IPO lockup periods for certain blocks of shares of Birkenstock (BIRK) and Turbo Energy (TURB) will expire next week.

Dividend watch: Companies that have an ex-dividend date coming next week include Logitech (LOGI), Getty (GTY), Philip Morris (PM), and Nucor (NUE). Companies forecast to increase their quarterly dividend payouts include Accenture (ACN) to $1.47 from $1.29, Honeywell International (HON) to $1.19 from $1.08, and Concentrix (CNXC) to $0.333 from $0.3025. Read through some of the dividend stock picks from Seeking Alpha analysts.

Investor events: Meta Platforms (META) will hold its annual Meta Connect event on September 25. The event focus on the company’s Reality Labs division, and is expected to include reveals of future hardware and software. CEO Mark Zuckerberg will give a keynote address. Intuit (NASDAQ:INTU) will hold its Investor Day event on September 26. Analysts have pointed to the potential that strategic updates and an AI roadmap could perk up shares. On the same day, Zeta Global (NYSE:ZETA) will hold its Zeta Live event. Bank of America tipped that there could be some read-throughs for HubSpot (HUBS) and Salesforce (CRM) in addition to Zeta Global.

Costco earnings preview Costco (COST) will release its FQ4 earnings report on September 26. Analysts expect the retail giant to report revenue of $79.9 billion, same-store sales growth of 6.3%, a gross margin rate of 19.7%, and EPS of $5.07. Options trading implies a 4.4% share price swing after the report is released. Costco dipped 0.7% after its last earnings report. Looking ahead, Jefferies thinks the long-anticipated membership fee increase announced recently by Costco (COST) is a positive catalyst for earnings and the stock. The firm quantified a possible ~3% benefit to EPS over each of the next two years. Analyst Corey Tarlowe sees potential for a higher COST multiple trading based on the continued productivity growth. A potential catalyst in the year ahead for Costco (COST) could be a stock split. The company fired off its last stock split in January 2000. At the time of that split, Costco’s (COST) stock was trading for a pre-split price of about $100.

Eyes on the skies: Southwest Airlines will host an Investor Day on September 26. Key topics will include 2025 guidance expectations and updates on the order book and fleet modernization. Crucially, the event will also showcase how Southwest Airlines (NYSE:LUV) is making major strategy pivots for the first time in 50 years with the introduction of assigned seating, red-eye flights, and extra legroom seats. The changes are being made to attract new customers to the carrier. Investors will be looking for the impact of LUV’s new network positioning, and how it will manage its revenue management system. Bank of America expects Southwest Airlines (LUV) management to provide more details on the financial benefits of the strategy reset and the near-term impact on cash burn and debt during the transition period. Shares of Southwest Airlines are up 8.5% over the last six weeks.

Spinoff watch: The spinoff by Jacobs (J) of its Critical Mission Solutions and Cyber & Intelligence government services businesses will become effective after the market closes on September 27. The spin-off is part of Jacobs’ previously announced plan to separate these businesses and merge them with Amentum in a Reverse Morris Trust transaction. Jacobs (J) will receive a $1 billion cash dividend at closing, plus additional value after closing, through disposition of a retained stake in the combined company.