09/17/2020

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The Week Ahead on Wall Street



Economic Data


Existing home sales for May are released this morning. In April, the reading tumbled by 17.8%, which was the biggest decline since July 2010. While sales of existing homes plunged, the median home price actually increased by 7% from April 2019. Depressed interest rates and low inventory has led to an increase in home prices across the country. The Chicago Fed National Activity Index is also released this morning.

Tomorrow, new home sales figures for May are published. In April, sales of single-family homes increased by 0.6% to a seasonally adjusted annual rate of 623,000 units, which surprised economists. Flash readings of manufacturing and service data for June are also released.

On Wednesday, the FHFA Home Price Index for April is printed along with the MBA Mortgage Applications Index. Last week, mortgage applications to purchase a home rose to an 11-year high. This was the ninth consecutive week of increases for the Mortgage Bankers Association’s metric that tracks mortgage applications.

On Thursday, the two most important releases to watch will be the weekly initial jobless claims report and the third estimate of Q1 GDP. In regard to the former, last week’s print showed that another 1.5 million Americans filed for first-time unemployment claims, worse than the 1.3 million claims economists were expecting. That was the 13th consecutive week that unemployment filings have topped 1 million. In regard to the latest estimate of Q1 GDP, three weeks ago the Commerce Department said the US economy shrank by 5% during the first three months of the year. This was more than the 4.8% contraction that was initially reported. The third estimate will highlight whether 5% is an accurate measure of how much the US sank during the early stages of the coronavirus.

On Friday, personal income and consumer spending figures for May are released. Core inflation and the Consumer Sentiment Index for June are published as well. The prior reading of consumer sentiment showed a reading of 78.9 in June, which was up from 72.3 in May. Some investors are optimistic about parts of the economy reopening, but others are concerned about rising coronavirus cases in certain states across the country.

Earnings


Hanover Insurance Group Inc (THG) is scheduled to report today. At the end of May the company declared a quarterly dividend of $0.65 per share. Hanover Insurance Group was also maintained at “overweight” by Piper Sandler at the beginning of June, with a price target of $114.

La-Z-Boy Inc (LZB) reports its latest results tomorrow. In early June the upholstery furniture giant laid off 10% of its workforce and closed a plant in Mississippi. La-Z-Boy expects the moves to result in expenditures of roughly $5-$7 million in fiscal 2021 pre-tax charges. AeroVironment Inc (AVAV) and IHS Markit Ltd (INFO) are also scheduled to report.

Winnebago Industries Inc (WGO) reports before the bell on Wednesday. Although the travel industry has slowed, recreational vehicle sales have not as Americans turn to camping and the outdoors after months of lockdowns. Year-to-date, Winnebago’s stock has gained roughly 30%. Paychex Inc (PAYX), National Beverage Corp (FIZZ), and BlackBerry Ltd (BB) are also scheduled to report.

Nike (NKE) reports after the bell on Thursday. The sports retail giant recently had its price target raised to $115 from $100 by Raymond James. Analyst Matthew McClintock thinks that as more people focus on health and wellness, Nike will be able to continue its success, despite challenges brought on by COVID-19. Accenture PLC (ACN), Walgreens Boots Alliance Inc (WBA), and Rite Aid Corp (RAD) are also scheduled to report.

Naspers Limited (NPSNY), a South Africa-based internet group and technology investor that operates in more than 120 countries, reports on Friday. The company’s holdings in the online payments, food delivery, and ad space could benefit from increased digitization even after the pandemic subsides. At the end of May, the Financial Times also reported that Naspers was among the potential bidders for the spinoff of eBay’s (EBAY) classified-advertising business.


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