Week Ahead on Wall Street: Discerning Investors
By: Mario Ismailanji · August 26, 2024 · Reading Time: 4 minutes
One Stock to Rule Them All
As the end of summer nears, the artificial intelligence revolution continues to shape financial markets. The landscape has evolved, however, and investors have grown slightly more skeptical of large-scale spending plans on the technology.
That’s not to say that the AI theme is no longer an important one. It is still a powerful force in the market. Yet relative to previous quarters where any mention of AI investment was seemingly rewarded through higher stock prices, investors have been more discerning lately on the amount of money (capital expenditure, or capex) big tech companies have plowed into AI. There’s also been focus on the amount of revenue & profit directly attributable to these investments (or lack thereof). Part of this shift has likely been driven simply by the passage of time – after the initial hype cycle died down, investors want to make sure companies are making prudent decisions. So far, the big tech companies have continued to invest in the space, with capex outpacing consensus expectations.
All that’s relevant for NVIDIA, the semiconductor company and poster child of the AI revolution, which reports results this week. Given the company’s dominance in the chip space, there’s likely no company more important to the AI theme than NVIDIA. That also means NVIDIA’s earnings are important for the market as a whole. It’s no exaggeration to say that the company might be the single-most important stock in the entire U.S. market right now. While NVIDIA has maintained its strong position, investors will look for clues on future spending and competition in the space.
Economic and Earnings Calendar
Monday
• July Factory and Durable Goods Orders: These metrics give insight into underlying trends for leading cyclical indicators.
• August Dallas Fed Manufacturing Activity: This is the Federal Reserve Bank of Dallas’ survey of manufacturing executives in the region on business conditions and their outlook.
Tuesday
• June FHFA House Price Index: This is a broad measure of single-family house prices released by the Federal Housing Finance Agency.
• June S&P CoreLogic Case-Shiller Home Price Index: This is a private sector measure of national home prices. After a period of slight decline in the second half of 2022 and early 2023, the index returned to growth and is now at record highs.
• August Conference Board Consumer Confidence: How consumers feel about economic conditions affect their spending habits. This survey places a particular focus on job availability and the state of the labor market.
• August Richmond Fed Manufacturing Activity: The Richmond Fed’s survey of manufacturing executives in the region on business conditions and their outlook.
• August Richmond Fed Non-Manufacturing Activity: The Richmond Fed’s survey of services executives in the region on business conditions and their outlook.
• August Dallas Fed Non-Manufacturing Activity: This is the Dallas Fed’s survey of services executives in the region on business conditions and their outlook.
Wednesday
• Weekly Mortgage Applications: Mortgage activity gives insight on demand conditions in the housing market.
• Fedspeak: Atlanta Fed President Raphael Bostic will participate in a moderated conversation on the economic outlook.
• Earnings: Autodesk (ADSK), Best Buy Co (BBY), Brown-Forman (BFB), Campbell Soup (CPB), Catalent (CTLT), Dollar General (DG), Lululemon Athletica (LULU), Ulta Beauty (ULTA)
Thursday
• 2Q GDP Second Estimate: The primary measure of economic activity in the United States, which is measured as total expenditure on a country’s goods and services.
• 2Q GDI First Estimate: An alternative measure of economic activity in the United States, which is measured as all income earned from the production of a country’s goods and services. Theoretically, this should equal GDP since one person’s spending is another person’s income, but differing data sources used between the two means there is often a difference between the two which is referred to as the statistical discrepancy.
• July Wholesale Inventories and Sales: Wholesalers often operate as an intermediary between manufacturers and retailers, serving as a key part of the goods supply chain.
• July Wholesale and Retail Inventories: Wholesalers and retailers often operate as intermediaries for the sale of manufactured products, serving as a key part of the goods supply chain.
• Weekly Jobless Claims: This high frequency labor market data gives insight into filings for unemployment benefits. Jobless claims have continued to show a labor market that remains strong despite having cooled.
• Fedspeak: Atlanta Fed President Raphael Bostic will give an introduction to the Fed and discuss the economic outlook.
• Earnings: Bath & Body Works (BBWI), Cooper Companies (COO), Salesforce (CRM), CrowdStrike (CRWD), HP (HPQ), NetApp (NTAP), NVIDIA (NVDA), JM Smucker (SJM)
Friday
• July Personal Income and Spending: These numbers give insight into how Americans are doing, which is important since consumer spending accounts for about two-thirds of economic growth in the United States.
• July Personal Consumption Expenditures Price Index: The Fed targets this inflation measure for its price stability mandate and believes PCE to be the best measure of consumers’ spending habits.
• August University of Michigan Consumer Sentiment: How consumers feel about economic conditions affect their spending habits. This survey places a particular focus on inflation and its trajectory.
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