Focus on Powell's speech, the Fed's meeting in Jackson Hole, and Nvidia results.
Earnings beat on deck makes Dick's Sporting Goods a buy.
Due to subpar performance and missed expectations, Macy's shares will suffer.
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As the stock market troubles from August continue and concerns that the Federal Reserve will keep interest rates higher longer persist, Wall Street's major indexes closed mainly down on Friday, wrapping off a dismal week.
The benchmark S&P 500 and the heavily weighted Nasdaq Composite both had weekly declines of 2.1% and 2.6%, marking the third consecutive week of losses, while the blue-chip Dow Jones Industrial Average lost 2.2% for the week.
The Nasdaq has now down 7.2% over the last three weeks, marking its worst three-week decline since late December.
The annual Economic Policy Symposium of the Federal Reserve, which will begin on Thursday in Jackson Hole, Wyoming, is likely to make next week again another interesting one.
For hints on the direction of interest rates, investors will closely watch Fed Chair Jerome Powell's address on Friday.
According to Investing.com's Fed Rate Monitor Tool, financial markets currently predict that the Fed will maintain rates steady at their present levels during its September meeting.
As the second quarter's earnings season comes to a close, there are few other corporate reports coming, including Wednesday's market favorite Nvidia (NASDAQ:NVDA). The valuation of the chip designer has nearly tripled year to date on the back of anticipated development in artificial intelligence.
Regardless of which way the market turns the following week, I have highlighted two stocks below: one that is likely to be in demand and another that might see further losses.
But keep in mind that my timeline is only for the upcoming week, from August 21 to August 25.
Dick's Sporting Goods Stock to Purchase
I predict that Dick's Sporting Goods' (NYSE:DKS) stock will outperform in the next week, with a potential breakout to a new record high on the horizon. This is because I think that positive consumer demand patterns will cause the athletic-gear retailer's second quarter profits to surprise to the upside.
On Tuesday, August 22, at 7:30AM ET, Dick's is due to announce its Q2 report. Results are anticipated to have benefited once again from strong demand for sports gear and apparel from its devoted client base as well as a conscientious inventory management strategy.
According to the options market, market players anticipate a significant swing in DKS shares following the print, with a probable implied move of almost 7% in either direction.
According to consensus projections, the athletic goods retailer company with headquarters in Pittsburgh, Pennsylvania, and more than 850 retail locations nationwide, would report profits per share of $3.81, up 3.5% from $3.68 in the same time last year.
As a result of strong sales growth across its sports clothing and footwear product categories, Dick's revenue is anticipated to increase 4.2% year over year to $3.24 billion.
Thanks to steadfast consumer demand for sports and recreation apparel and equipment even while overall discretionary spending sways, Q2 same-store sales—which are projected to climb 2.5% compared to last year—will certainly surpass projections.
Dick's has outperformed Wall Street's top and bottom-line projections for 12 straight quarters in a difficult market for retailers, highlighting the strength of its core business and great performance across the board.
As a result, despite a challenging market for retailers, I think Dick's management will present an optimistic forecast for the current quarter. Dick's is still well-positioned for the crucial back-to-school buying season.
On Friday, DKS shares achieved a closing price of $146.62, just shy of the all-time high of $152.61 set on March 9. Dick's is now the largest sports goods retail business in the country with a market valuation of over $12.6 billion.
Shares have increased by 21.9% year-to-date, outpacing the SPDR® S&P Retail ETF's (NYSE:XRT) 7.2% gain. This ETF tracks an equal-weighted index of U.S. retail businesses that are included in the S&P 500.
Sell This Stock: Macy's
Keeping with retailers, I predict Macy's (NYSE:M) shares will have a difficult week, possibly returning to previous lows, as the failing department store operator will, in my opinion, underperform projections for second quarter results and give a bleak outlook.
M shares, which hit a 2023 low of $12.80 on June 1, ended the day at $15.12. The department store retailer with headquarters in New York City now has a market valuation of $4.1 billion.
In 2023, shares have fallen 26.8% farther than the performance of the whole market so far this year. In contrast, the stock prices of rival department store chains Kohl's (NYSE:KSS) and Nordstrom (NYSE:JWN) have increased by 18.4% and 11.4%, respectively, over the same time period.
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In full disclaimer I am now long the Dow Jones Industrial Average through the SPDR Dow ETF (DIA). My positions in the Energy Select Sector SPDR ETF (NYSE:XLE) and the Health Care Select Sector SPDR ETF (NYSE:XLV) are both long. The ProShares Short S&P 500 ETF (SH), ProShares Short QQQ ETF (PSQ), and ProShares Short Russell 2000 ETF (RWM) allow me to be short the S&P 500, Nasdaq 100, and Russell 2000 as well. Based on continuing risk evaluations of the macroeconomic climate and firms' financials, I periodically adjust my portfolio of individual stocks and ETFs. The opinions expressed in this post are the author's alone, and they shouldn't be construed as investment advice.
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