The Week Ahead on Wall Street

Economic Data

There are no major economic data reports scheduled for today.

Tomorrow, the IHS Markit manufacturing PMI and ISM Manufacturing Index for August are released. July construction spending and August motor vehicle sales are also due. Car sales are an important economic indicator because they provide a real-time snapshot of consumer demand for big-ticket items. The auto industry in the US accounts for millions of jobs and a significant portion of consumer spending. Vehicle sales rose 11.3% between June and July. Some of this may have been driven by people who want to travel, but are trying to avoid planes and public transportation. Analysts will be eager to see if this trend continued in the final month of summer.

On Wednesday, look out for the August ADP employment report, July factory orders, and the Federal Reserve’s Beige Book. ADP reported that private payrolls in the US increased by only 167,000 in July. For context, Dow Jones estimated that 1 million would be added, and last month’s figure represents a steep tumble from the 4.3 million added in June. The latest figure lends credence to the view that June’s nascent economic recovery was sidelined in July after a flare-up in coronavirus cases across the country.

On Thursday, weekly initial claims and July trade deficit numbers are released. Last week, initial jobless claims totaled just over 1 million for the week ending August 22, which was more or less in line with expectations. This was the 22nd time in 23 weeks that the figure topped 1 million. The report sheds light on the fractured labor market which is weighing down a broad-based economic recovery.

On Friday, look for August nonfarm payrolls, August unemployment, and August average hourly earnings. Nonfarm payrolls increased by 1.763 million in July and the unemployment fell to 10.2%. Both statistics were better than expected, so investors will be curious to see if the positive trend continued in August.

Earnings Reports

To begin the week, Zoom Video Communications Inc (ZM) reports its earnings today. The video conferencing software’s shares rallied more than 270% over the course of the pandemic, as it has become one of the go-to platforms for working, socializing, and learning. Last week, the Zoom website experienced an outage just as many school districts were using it for their first days of the semester. The bug has since been resolved, but some worry that this may have hurt the company’s reputation for reliability.

H&R Block Inc (HRB) reports its earnings tomorrow. The company responded to the pandemic quickly by ramping up its digital offerings like Tax Pro Review, Tax Pro Go, and Approve Online, when many of its in-person offices were closed during tax season. Investors will be curious to see if the company’s earnings have been impacted by tax day being pushed from April to July this year.

On Wednesday, Macy’s Inc. (M) hands in its report card. The department store chain with a market capitalization of $2 billion has been battered by COVID-19—its shares dropped over 60% since the pandemic set in. However, unlike some of its other competitors in the retail sphere, Macy’s has $4.5 billion in financing, which may give it a better chance of survival than some other large retailers.

Lululemon (LULU) will report its earnings on Thursday. The athletic apparel company has suffered from store closures, though it made up some ground through online sales as consumers purchase comfortable clothes for working at home. Lululemon also bought Mirror, an at home fitness startup, at the end of June for $500 million. Wall Street will be curious to see how this acquisition fits into Lululemon’s overall offering.

To round out the week, Gabelli Equity Trust Inc (GAB) reports earnings on Friday. Gabelli provides diversified, closed-end management investments, and has about $2.4 billion in total net assets. Friday is lighter on the earnings front as investors have their eyes on the Labor Day weekend before a busy fall.

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