• Fed speakers and Nvidia earnings will be in focus this week.
• Nvidia is a buy with another huge quarter of outperformance and leverage on the deck.
• The goal is to sell amid declining sales, and the outlook is expected to be pessimistic.
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US stocks closed lower on Friday, with the S&P 500 and Nasdaq posting their biggest single-day losses in two weeks, as the post-election rally lost momentum and investors worried about the path of interest rates.
Over the course of the week, the S&P 500 fell 2.1%, while the Nasdaq Composite, which is dominated by technology stocks, fell 3.1%. The Dow Jones Industrial Average lost 1.2% during this period.
Source: Investing.com
Next week is expected to be eventful as investors continue to evaluate the outlook for the economy, inflation, interest rates and corporate earnings.
On the economic calendar, flash Purchasing Managers’ Index (PMI) readings for manufacturing and the services sector will attract attention on Friday, along with updates in the housing market.
It will be accompanied by a large list of Fed spokespeople, with the likes of Governors Jeffrey Schmid, Lisa Cook, Michelle Bowman and Beth Hammack scheduled to make public appearances.
Source: Investing.com
Expectations for a 25 basis point rate cut at the Fed’s December meeting were 63% on Sunday morning, according to Investing.com’s Fed watch tool.
Elsewhere, in terms of corporate earnings, Nvidia ( NASDAQ:NVDA ) results will be the main update for the week as the third-quarter reporting season winds down. Other notable names set to report earnings include Walmart ( NYSE:WMT ) , Target ( NYSE:TGT ) , TJX Companies ( NYSE:TJX ) , Ross Stores ( NASDAQ:ROST ) , Lowe’s ( NYSE:LOW ) , and Palo Alto Networks (NYSE:LOW). NASDAQ:PANW), and Snowflake (NYSE:SNOW).
No matter which direction the market heads, below I’m highlighting one stock that’s likely to be in demand and another that could see a new decline. Remember though, my time frame is… only For next week, Monday, November 18 – Friday, November 22.
Nvidia is poised for big gains this week, as the tech giant prepares to deliver another superior quarterly earnings report amid growing demand for its artificial intelligence chips.
The Santa Clara-based company is scheduled to report its third-quarter earnings after the market close on Wednesday at 4:20pm ET, with expectations high for another record performance. A call with CEO Jensen Huang will take place at 5:00 PM ET.
Market participants expect a big swing in NVDA shares after the print, according to the options market, with a potential implied move of 9.8% in either direction.
Source: Investing Pro
Investor sentiment is very bullish, as evidenced by 30 upward earnings revisions over the past 90 days, according to InvestingPro. Nvidia has consistently outperformed expectations and has become a leader in a technology sector where growth prospects in artificial intelligence remain strong.
Consensus forecasts call for Nvidia to report EPS of $0.74, up 85% from EPS of $0.40 in the year-ago period. Meanwhile, revenue is expected to rise 82% annually to $33.1 billion, underscoring the company’s unparalleled dominance in the AI chip market.
Particularly interesting will be the guidance for the current quarter, which marks the debut of Nvidia’s next-generation Blackwell AI processor. CEO Jensen Huang described demand for Blackwell as “insane,” paving the way for a better-than-expected outlook.
NVDA stock finished Friday’s session at $141.98, just below its record high of $149.65 reached on November 12. Shares are up 186.7% in 2024, making Nvidia one of the best-performing S&P 500 stocks of the year. At current levels, Nvidia’s market cap is $3.48 trillion, making it the most valuable company traded on a US stock exchange.
Source: Investing.com
Notably, InvestingPro’s quantitative AI-powered models rate Nvidia with a strong “Financial Health Score” of 3.7 out of 5.0, highlighting its strong profitability and promising growth trajectory.
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In stark contrast, Target faces a much more challenging outlook. The big box retailer is grappling with high operating costs, shrinking margins and intense competition from rivals like Walmart.
Volatile traffic trends, seasonal weather challenges, and uncertainties regarding the impact of the election are compounding the retail giant’s difficulties.
Target — the seventh-largest retailer in the United States — is scheduled to release its third-quarter earnings report before the opening bell on Wednesday at 6:30 a.m. ET.
According to the options market, traders are pricing in a swing of about 9% in either direction for TGT stock after the print.
Source: Investing Pro
Wall Street expects earnings of $2.30 per share, which would represent a 9.5% increase from $2.10 a year earlier. Revenue is expected to grow marginally by 2% to $25.9 billion, highlighting weak consumer demand for discretionary goods such as home furnishings and apparel.
Looking ahead, CEO Brian Cornell will likely provide cautious guidance for the all-important holiday quarter due to the challenging operating environment, competitive landscape and continued discount activity. External headwinds, such as weather disruptions and broader economic uncertainty, have further complicated the forecast.
With disappointing third-quarter results and a cautious holiday outlook on the horizon, the stock’s downside risks outweigh the potential rewards. Investors should avoid Target amid a challenging retail landscape.
TGT stock closed at $152.13 on Friday. Shares have underperformed the S&P 500 by a wide margin this year, rising 6.8%. At current valuations, the Minneapolis-based retailer has a market cap of $70 billion.
Source: Investing.com
It’s worth noting that Target currently has a below-average InvestingPro “Financial Health Score” of 2.6 out of 5.0 due to ongoing concerns about weak profit margins and spotty sales growth.
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Disclosure: At the time of writing, I trade the S&P 500 and Nasdaq 100 via the SPDR® S&P 500 ETF and the Invesco QQQ Trust ETF. I’m also long the Technology Select Sector SPDR ETF (NYSE:XLK).
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies’ financials.
The opinions discussed in this article are solely those of the author and should not be considered investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv For more stock market analysis and insight.
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