The Week Ahead on Wall Street
There is no economic data scheduled to be released today.
Tomorrow, the Conference Board releases the Consumer Confidence Index for May. This data point tracks how optimistic American consumers are about their financial situation in the coming months. In April the index rose sharply to 121.7. That is up from 109 in March. As of April consumer confidence was at its highest level since last February. Also published Tuesday is the Case-Schiller National Home Price Index for March and new home sales for April.
There is no data scheduled to be released on Wednesday.
On Thursday, the Labor Department releases initial and continuing jobless claims for the previous week. This tracks the number of people who file for unemployment for the first time and those who continue to collect unemployment benefits. The numbers have been declining in recent weeks as pandemic restrictions ease and more people return to work. Last week initial jobless claims fell by 444,000, which was a greater-than-anticipated drop. Continuing jobless claims increased 111,000. Continuing claims run a week behind initial jobless claims. April’s durable goods and pending homes for sale are also released Thursday.
On Friday, consumer spending for April is released. Tracked by the Bureau of Economic Analysis, this data point measures personal consumption expenditures or the value of the goods and services purchased by consumers in the US. In March, consumer spending was up 4.2%. It’s expected to continue to increase as the economy rebounds. Also released Friday is personal income and core inflation for April and consumer sentiment for May.
Tomorrow, AutoZone (AZO) reports quarterly earnings. The auto parts retailer is benefiting from people keeping their vehicles longer, which means they need more service and repairs. Currently the average age of vehicles on the road is close to 12 years.
Also tomorrow, Toll Brothers (TOL) reports quarterly earnings. The home builder is enjoying strong demand for new homes as low interest rates drive more buyers into the market. Prices are surging with limited inventory of existing homes, which is prompting homebuyers to turn to new homes instead. In March the median existing home sale price increased a record 17.2% to $329,100.
Be on the lookout for Snowflake (SNOW) to report its quarterly earnings Wednesday. Goldman Sachs (GS) is singing the praises of this cloud computing company, recently raising its investment rating to buy from neutral. The Wall Street firm pointed to Snowflake's competitive position in the cloud market and a recent decline in its share price which makes it an attractive entry point. Investors will be paying close attention to what the company has to say about its growth prospects for the remainder of the year.
On Thursday, Costco (COST) reports quarterly earnings. Costco is among the growing list of retailers to lift mask requirements for customers fully vaccinated against COVID-19. The retailer is not requiring proof of vaccination but is asking all customers who are not inoculated to continue to wear a face covering. Earlier this month the CDC changed its indoor mask guidance for fully vaccinated people. It will be interesting to see how the new mask rule impacts Costco’s foot traffic and sales.
Also on Thursday, Salesforce (CRM) reports quarterly earnings. The customer relationship management software company has started to slowly bring employees back to its San Francisco headquarters. A Morgan Stanley software analyst also recently increased his rating on Salesforce to Overweight from Equal Weight arguing that the company is “well positioned for ramping digital transformation demand." Investors will be tuning in to see what's next for the company.
The Week Ahead at SoFi
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Travelers Seek Alternatives to Hotels
Airbnb, Vrbo Poised to Benefit
Airbnb (ABNB) and Vrbo (EXPE) are expected to be big beneficiaries of a travel rebound driven by COVID-19 vaccinations and easing pandemic restrictions.
Though some patterns of pre-pandemic life are beginning to return, people are still choosing to travel to destinations closer to home, and are opting for more rural vacation spots. As a result, they are booking lodging through Airbnb and Vrbo more than they are booking hotel rooms.
The number of weekly active users on Airbnb’s app is up quarter-over-quarter and online searches for Vrbo have been exceeding 2019 levels since January. That trend in accommodation preferences is expected to continue through 2021, positioning both Airbnb and Vrbo for more growth.
Booking.com Won’t Get Left Behind
Booking.com (BKNG), which does business booking hotel rooms for travelers, does not want to be left out of the shift to alternative accommodations in the US. The company offers a large selection of alternative accommodations in Europe and plans to increase its offerings in the US. Booking.com’s platform lets travelers book accommodations without a back and forth between the host and guest. The company thinks this feature gives it an edge over Airbnb.
Vrbo’s parent company, Expedia, is also working to take advantage of shifting consumer preferences. Reportedly, the company has recruited some of Airbnb’s hosts for Vrbo. That move prompted one Wall Street firm to raise Expedia’s 2021 revenue growth estimates for 2021 and 2022.
Regulations Pose Risks
Airbnb, Vrbo, and other rivals are preparing for an increase in travel. Industry watchers expect the increase will mainly be confined to domestic travel for the time being. When international travel picks up again, Airbnb will benefit given its inventory in cities around the globe.
The biggest challenge for Airbnb and Vrbo in the near future could be regulations. These companies could struggle if cities limit or regulate them to help the hotel industry.
Congress Allocates $45 Billion to Assist Renters
Renters Can Receive Help for 18 Months
Many renters have struggled during the pandemic and more than one in seven adults are still behind on their rent. Congress has allotted $45 billion in aid to help these renters catch up. Currently, there are more than 360 programs around the country giving renters up to 18 months of help. The aid includes a mix of money for past due rent and for future payments.
With the national eviction moratorium ending in June, it is important for people who have had difficulty paying their rent to act now. Millions of people could be at risk of eviction once the moratorium is lifted.
Requirements for Rent Assistance
To receive rent money through these programs, one member of a household must qualify for unemployment benefits, or show they lost income or incurred significant expenses because of the pandemic. Renters also have to demonstrate that they may be evicted without the aid.
Additionally, renters’ income level for 2020 must not be more than 80% of the median income of the neighborhood where they live. Some states are prioritizing renters whose income is 50% or less of the median average and those who have been unemployed for more than 90 days. The Federal Government has given states flexibility in how they manage these programs.
National Rent Moratorium Ending
The assistance is also open to renters who already received aid but are still behind on rent. The National Low Income Housing Coalition operates a website which has links to the state’s online applications. The process can vary depending on the individual programs. Some require renters to fill out lengthy applications while others are more streamlined. The processes in each state also vary depending on demand for assistance. In some states such as Alaska, demand is so high that people are on waitlists.
Rent assistance programs have been a lifeline for millions during the pandemic. With the moratorium on evictions about to end, now is the time for struggling renters to take advantage of this government aid.