There was plenty of divergence this week as rising bond yields following a hotter-than-expected reading in manufacturing activity hit the economically sensitive Dow Jones Industrial Average, while an incredible quarter from Nvidia propelled the Nasdaq. The S&P 500, which leans more tech than the Dow and less than the Nasdaq, was stuck in the middle. At the S&P 500 sector level, only information and communications technology services finished higher for the week. Tech gained over 3% – again, thanks Nvidia. On the other hand, energy led the decline, falling almost 4% for the week. Our only oil and gas business, Coterra Energy, has declined as a result. Besides Nvidia, which was the star of the show, Club names Palo Alto Networks and TJX Companies also reported results this week. All three released strong reports – despite the initial reaction we saw at Palo Alto Networks. Cybersecurity sector stocks actually ended the week higher. More broadly, 96% of S&P 500 companies have delivered their financial results for their most recent quarters. According to data compiled by FactSet, 78% of them had positive earnings surprises and 61% had positive sales surprises. Looking ahead, four more club names – Salesforce, Best Buy, Foot Locker and Costco – are on next week’s earnings schedule. That makes Broadcom’s quarterly release next month the final portfolio report of the earnings season. After a quiet week and concerns about inflation, we get the Fed’s favorite gauge of price pressure: the Personal Consumption Expenditures (PCE) Price Index. Economy April personal spending and income data, released Friday, will get the most attention because it contains the core PCE price index. As heightened concerns about inflation continue to drive much of the daily action, we expect the inflation rate to continue to decline. The consensus estimate by FactSet calls for a 2.7% year-over-year increase in overall PCE and a 2.8% year-over-year increase in core PCE – both would be in line to what we saw in March. Thursday brings the second of three readings of gross domestic product (GDP) for the first quarter of 2024. While it is an important indicator of general economic activity in the United States, it is also important to keep in mind Mind that we are already two months into the second trimester. This means investors will likely pay more attention to more recent data, such as the aforementioned core PCE and earnings. Pending home sales for April will be released Thursday. Housing has been the most sensitive area of inflation and a major influence, given that it is a large and unavoidable cost. Any sign that the rise in house prices is slowing would be good news. Results Salesforce reports Wednesday after the bell. We want to know how investments in artificial intelligence are driving demand for the company’s various cloud offerings, particularly the Data Cloud. Are they generating new business as well as expansion of existing business partnerships? Of course, we will also look for leaders who can maintain a healthy balance between growth and profitability while making investments and marketing them to customers. Best Buy reports Thursday before the bell. We want to see signs that an AI-driven hardware and device refresh cycle will increase traffic to stores. Any comments from management regarding AI-ready devices generating consumer interest will be a key topic for us. Same-store sales are expected to be negative in the reported quarter, so the post-earnings conference call will be crucial to understanding what electronic innovations are in the works for the coming quarters. Foot Locker also reported Thursday morning. We want to see continued progress in CEO Mary Dillon’s Lace Up turnaround strategy. Last time around, the report was brutal, with management failing to meet its full-year targets and pushing back operating profit margin targets by two full years. The company must show us that the worst is in the rearview mirror if the stock is to have any hope of escaping the penalty box. Costco reports Thursday after the bell. We expect to get a lot of information on the state of the consumer and inflation. Quarterly sales results won’t be that revealing, given that Costco, unlike most companies, releases its sales monthly. However, feedback on what the company is seeing in terms of foot traffic and buyer preferences will help inform our thinking about the state of the economy. Around two thirds of GDP is linked to private consumption. So when a company with the scale and breadth of Costco’s offerings presents a report, it’s crucial to listen to what management is seeing on the ground. There has also been speculation about whether Costco might split its shares and when it might increase member dues. We are historically due for an increase in contributions. Calendar Monday May 27 The stock market is closed for Memorial Day. Tuesday, May 28 After the bell: CAVA Group (CAVA), Box (BOX) Wednesday, May 29 Before the bell: Abercrombie & Fitch (ANF), Chewy (CHWY), Dick’s Sporting Goods (DKS), Advance Auto Parts (AAP) After the bell: Salesforce (CRM), Okta (OKTA), HP Inc (HPQ), American Eagle Outfitters (AEO), Capri Holdings (CPRI), Red Robin Gourmet Burgers (RRGB) Thursday May 30 Before the bell: Best Buy (BBY) ), Foot Locker (FL), Canopy Growth (CGC), Dollar General (DG), Kohl’s (KSS), Burlington Stores (BURL) After the bell: Costco (COST), Dell Technologies (DELL), Zscaler (ZS), Marvell Technology (MRVL), MongoDB (MDB), SentinelOne (S), ULTA Beauty (ULTA), Nordstrom (JWN), Gap (GPS) 8:30 a.m. ET: Initial unemployment benefit claims 8:30 a.m. ET: Gross Index Domestic Prices 10 a.m. ET: Pending Home Sales Friday, May 31 8:30 a.m. ET: Personal Spending and Income and PCE Price Index (See here for a complete list of Jim Cramer’s Charitable Trust stocks.) As a Subscriber at CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after a trade alert is sent before buying or selling a stock in his charity’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after the trade alert is issued before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, AS WELL AS OUR DISCLAIMER. NO OBLIGATION OR FIDUCIARY OBLIGATION EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
A trader works during the closing bell of the New York Stock Exchange (NYSE) on March 17, 2020 on Wall Street in New York.
Johannes Eisele | Afp | Getty Images
There was plenty of divergence this week as rising bond yields following a warmer-than-expected manufacturing activity reading slammed economically sensitive sectors. Dow Jones Industrial Averagewhile an incredible quarter of Nvidia powered by Nasdaq. THE S&P500which leans more tech than the Dow and less than the Nasdaq, was stuck in the middle.
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