- Market bellwether Nvidia (NASDAQ:) drags down Wall Street.
- AI-inspired rally and potential Fed rate cuts spark investor intrigue.
- Heavy earnings week includes FedEx, Nike, Micron, and Walgreens.
As Wall Street closed out the week, shares were mostly lower, with Nvidia casting a shadow over the technology sector’s performance.
Despite this, investors witnessed an overall positive week, as blue-chip stocks soared by 1.4%, accomplishing their best weekly gains since May. The benchmark index saw a 0.6% increase, while the tech-heavy NASDAQ finished the week on a flat note.
The upcoming week promises to be no less enthralling, as market participants eagerly await clues about the sustainability of the AI-fueled market rally and the potential timeline for a Federal Reserve interest rate adjustment.
At the forefront of economic events will be Friday’s core PCE price index, a crucial metric for the Fed in assessing inflation levels. Additionally, a roster of Fed speakers, including district governors Christopher Waller, Michelle Bowman, Mary Daly, Lisa Cook, and Patrick Harker, are set to provide further insights.
Investors have pushed back the timeline of the Fed’s first rate cut to September, as indicated by Investing.com.
Looking ahead, the earnings calendar for the upcoming week boasts reports from corporate heavyweights such as FedEx, Nike, Micron, and Walgreens Boots Alliance.
Amidst this backdrop, one stock stands out as a potential buy, while another may face headwinds in the days ahead. The timeline for these insights spans Monday, June 24, to Friday, June 28.
The Rising Star: Micron
Micron is poised for a stellar performance this week, with expectations of strong top and bottom-line growth, fuelled by robust memory demand from cloud computing providers.
Based in Boise, Idaho, the memory-chip giant is slated to unveil its fiscal third-quarter earnings after the closing bell on Wednesday at 4:05 PM ET, followed by a call with President and CEO Sanjay Mehrotra.
Options markets predict a significant swing in Micron’s stock post-earnings, with a potential implied move of around 11% in either direction.
Previous earnings reports have triggered outsized stock movements, with shares soaring nearly 17% in the last quarterly report in March, according to data from InvestingPro.
Analyst sentiment is overwhelmingly optimistic, with 27 out of 28 analysts raising profit estimates over the past 90 days, driven by promising AI growth prospects.
Micron is anticipated to post earnings of $0.53 per share, a significant reversal from a year-ago loss of $1.43 per share, buoyed by the uptick in memory chip sales.
Revenue is expected to surge by 77.6% year-over-year to $6.66 billion, bolstered by sales of high-bandwidth memory devices catering to AI-centric data centers.
Investors will keenly await Micron’s guidance for the ensuing quarter and beyond, with the company well-positioned to leverage prevailing market conditions and the burgeoning AI trend.
Closing Friday’s session at $139.54, just shy of its all-time peak of $157.50, Micron boasts a market cap of $154.5 billion.
Having surged by 63.5% since the year’s commencement, Micron continues its upward trajectory, supported by a strong ‘Financial Health Score’ and a commitment to consistent dividend increments.
The Falling Titan: Walgreens Boots Alliance
Conversely, Walgreens Boots Alliance faces a challenging week, potentially bracing for fresh lows as lackluster earnings and guidance loom on the horizon, marred by a tough macroeconomic climate.
Walgreens is set to release its fiscal third-quarter update before Thursday’s market open at 7:00 AM ET.
Expectations of a substantial stock swing are rife, with options markets forecasting a potential implied move of about 10% following the earnings report.
Struggling against macro hurdles, all 12 analysts surveyed by InvestingPro have slashed profit estimates in the past 90 days, anticipating a 40% drop from initial forecasts.
The pharmacy giant is likely to report earnings of $0.72 per share, down 28% from the year-ago figure of $1.00, amid increasing cost pressures and dwindling margins.
Revenue is projected to inch up by 1.5% year-over-year to $35.94 billion, reflecting subdued consumer spending in a challenging retail environment and a gradual scaling of its healthcare segment.
Given these headwinds, it is plausible that Walgreens might revise its full-year profit guidance downwards, as it continues to invest heavily in transitioning to a comprehensive healthcare entity from a traditional retail drugstore chain.
Closing Friday at $15.97, near a recent low of $14.62, the stock is languishing at its weakest level since December 1997. With a market cap of $13.8 billion, Walgreens was ousted from the Dow Jones Industrial Average earlier this year, underperforming the broader market by 38.8% year-to-date.
Evidently struggling, Walgreens sports a dismal InvestingPro ‘Financial Health’ rating of 1.5 out of 5.0 due to concerns over its considerable debt load and gloomy profit and revenue prospects.
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