Economic concerns that weighed on stocks in early August have continued to ease in recent days, allowing Wall Street to post its best week of the year. The tech-heavy Nasdaq Composite led the way with a weekly gain of 5.3%, followed by the S&P 500, up 3.9%, and the Dow Jones Industrial Average, up 2.9%. For all three major indexes, this is the biggest weekly gain of 2024. No club holdings have reported earnings in the last five sessions, but we did get some important updates on the state of the economy. Wednesday’s July consumer price index – the most important report of the week – was slightly below expectations at the headline level, rising 2.9% annually versus the 3% expected. Core CPI, which excludes volatile food and energy prices, was in line with expectations, coming in at 3.2% annualized. A day earlier, we got a weaker-than-expected July producer price index report, which pushed up the major averages and set the tone for the rest of the week. On Thursday, weaker-than-expected initial jobless claims and a much stronger-than-expected July retail sales report painted a picture that the economy is holding up even as inflation falls. That’s a Goldilocks setup for stocks, and allowed the S&P 500, Dow and Nasdaq to post another leg higher in the second half of the week. An update on the U.S. housing market on Friday was disappointing, but not enough to kill the positive sentiment. Housing starts were recorded at a seasonally adjusted 1.238 million on an annualized basis, below expectations of 1.35 million, according to FactSet. Building permits were issued at a seasonally adjusted 1.396 million on an annualized basis, below the estimate of 1.43 million, according to FactSet. With companies like Home Depot and Walmart reporting quarterly results, 93% of S&P 500 companies have now reported earnings. Of those, 79% beat earnings expectations, while 60% reported better-than-expected revenue, according to FactSet. Looking behind the scenes of the S&P 500, technology was the best-performing sector, gaining 7.5% for the week. Consumer discretionary and financials — both economically sensitive groups that were hit hard in early August — rose 5.2% and 3.2%, coming in second and third, respectively. Real estate was the worst-performing of 11 sectors in the S&P 500, but managed a 0.07% gain. Energy and utilities were the next biggest laggards, but still rose 0.85% and 0.97%, respectively. The macroeconomic calendar for the next five trading sessions is thin on the ground, so expect corporate earnings and management commentary to dominate the action on Wall Street. Economy: After a busy past few days, there’s pretty little economic news in the week ahead. But the state of the U.S. housing market will take center stage. The July existing home sales report will be released on Thursday, followed by the new home sales report a day later. Housing costs remain a stubborn source of inflation, with the housing index showing a 5.1% year-over-year increase in this week’s CPI report. For that reason, any indication that more people are willing to sell their homes as interest rates fall should be seen as a positive for affordability and, in turn, the U.S. economy. The more supply there is in the market, the better it is for buyers. We like to say that the housing market is “punching above its weight class” in terms of economic impact, as new home creation means increased demand for everything from furniture to utilities to services like internet, etc. Fed Speech: Also on Friday, we’ll hear Federal Reserve Chairman Jerome Powell at the annual central bank meeting in Jackson Hole, Wyoming. Investors will hear Powell’s latest thoughts on the U.S. economy, particularly the labor market. A lot has happened since the Fed’s late July meeting, when Powell signaled that a rate cut was possible in September if inflation and labor market data continued to show easing price pressures and a slowdown in the labor market. Days after those remarks, the weaker-than-expected July jobs report sparked worries about a looming U.S. recession, but those fears eased thanks to more encouraging data in recent days. Earnings: On the earnings side, we’ll hear from club holdings Estee Lauder, Palo Alto Networks and TJX Companies. Estee Lauder: The cosmetics maker reports its fourth-quarter results on Monday morning, meaning its guidance for the current fiscal year will likely dictate the stock’s reaction. Our expectations for the reported quarter are quite low, and we decided to sell some shares of Estee Lauder last month to ensure we weren’t just dumping our winners, which would leave us sitting on a pile of underperforming stocks. We’ll keep a close eye on profit margins as we look for signs that management’s plan to recover earnings will be effective despite the subdued consumer environment, particularly in China. Palo Alto Networks: As we said in our detailed quarter preview on Friday, our three areas of focus — aside from revenue and earnings results, of course — will be progress on the “platformization” strategy, remaining performance obligation growth, and signs that customer demand remains healthy. We continue to view cybersecurity as a critical long-term theme for investment. But after Palo Alto’s stock made a huge run over the past two weeks, we changed our rating on the stock to 2 on Friday, meaning we would wait for a pullback before adding to our position. TJX Companies: In addition to sales and earnings, we will be closely monitoring store sales trends at TJ Maxx and Marshalls, as well as the HomeGoods segment. Executives’ comments on footfall and ticket size will also be interesting, as we expect inflation-fearing consumers to flock to discount stores — and TJX owns the best of them — as they want to get the most for their money. This dynamic should lead to a successful back-to-school season for TJX. Monday, August 19th Before trading opens: Estee Lauder (EL), ZIM Integrated Shipping (ZIM) After trading opens: Palo Alto Networks (PANW), Fabrinet (FN) Tuesday, August 20th Before trading opens: Lowe’s Companies (LOW), Workhorse Group (WKHS), Medtronic (MDT), Navios Maritime Partners LP (NMM), Futu Holdings (FUTU), Kingsoft Cloud Holdings (KC), Vipshop Holdings (VIPS), XPeng (XPEV), Amer Sports (AS), H World Group (HTHT), Premier (PINC), AiHuiShou International (RERE) After trading opens: Dada Nexus (DADA), La-Z-Boy (LZB), Toll Brothers (TOL), Keysight Technologies (KEYS), Jack Henry & Associates (JKHY), Chemical & Mining Co. of Chile (SQM), ZTO Express (ZTO), Coty (COTY) Wednesday, August 21st 2:00 p.m. ET: FOMC Minutes Before the Gong: TJX Companies (TJX), Target (TGT), Macy’s (M), Dycom Industries (DY), Analog Devices (ADI), ZEEKR Intelligent Technology Holding (ZK) After the Gong: Snowflake (SNOW), Zoom Video Communications (ZM), Wolfspeed (WOLF), Synopsys (SNPS), Agilent Technologies (A), Urban Outfitters (URBN), Nordson (NDSN) Thursday, August 22 8:30 a.m. ET: Initial Jobless Claims 9:15 a.m. ET: Flash PMI 10:00 a.m. ET: Existing Home Sales Before the Gong: Baidu (BIDU), OSI Systems (OSIS), Peloton Interactive (PTON), Advance Auto Parts (AAP), BJ’s Wholesale Club (BJ), Canadian Solar (CSIQ), Weibo (WB), Bilibili (BILI), NetEase (NTES), TD Bank (TD), Viking Holdings (VIK) After the gong: CAVA Group. (CAVA), Bill.com Holdings (BILL), Workday (WDAY), Intuit (INTU), Ross Stores (ROST) Friday, August 23 10:00 a.m. ET: New home sales Before the market opens: Gold Fields (GFI) (Jim Cramer’s Charitable Trust is long ***FILL IN***. A full list of stocks can be found here.) As a subscriber to 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 from his Charitable Trust’s portfolio. If Jim has discussed a stock on CNBC television, he will wait 72 hours after the trade alert is issued before executing the trade. THE INVESTING CLUB INFORMATION DESCRIBED ABOVE IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY AND OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR DUTY EXISTS OR IS CREATED BY RECEIVING INFORMATION RELATED TO THE INVESTING CLUB. NO PARTICULAR RESULT OR PROFIT IS GUARANTEED.
Traders work on the trading floor of the New York Stock Exchange on August 16, 2024.
Angela Weiss | AFP |
The economic concerns that weighed on the stock markets in early August have continued to ease in recent days, giving Wall Street its best week of the year.
