Here are 2 big things we are watching in the stock market next week
The first quarter earnings season is winding down, but one team name is expected to report this week and several pieces of important economic data are at stake. Let’s take a closer look. 1. Earnings: Qnity Electronics is our only stock on the earnings calendar, with results due before Tuesday morning’s open. Analysts expect Qnity to report earnings of 92 cents per share on revenue of $1.27 billion. Spinned out of DuPont last year, Qnity is a pick-and-shovel game for data center construction, offering a number of specialty materials and products used to manufacture and package semiconductors. Given everything we’ve heard this earnings season about the demand for AI computing power, we feel good about the numbers Qnity is set to report. No matter where the need is – be it central processing units (CPUs), Nvidia graphics processing units (GPUs), or memory chips – all reflect Qnity well. One area where we are prepared to see some weakness is in consumer electronics, where demand could be affected by the rapid increase in memory prices. When Qnity reported its fourth-quarter numbers earlier this year, management detailed a multi-year transformation plan aimed at streamlining operations, improving productivity, and reducing costs, leading to a $100 million increase in its EBITDA (earnings before interest, taxes, depreciation, and amortization) by the end of 2028. On the call, we will be able to hear how the interested party will deal with additional programs if the team wants to hear how the program is interested. improvements that could result in an increase to the $100 million target. Finally, we miss the stock rear. Qnity shares are trading near all-time highs and are up 80% year-to-date, so expectations are high, and any signs of imperfection can be met with profit-taking. Current stock performance of Q YTD mountain Qnity. 2. Economic data: This week is all about affordability on Main Street. The April consumer price index (CPI) is out on Tuesday. In the headline number, economists polled by FactSet expect to see an annual increase of 3.7% — a sharp acceleration from the 3.3% reading in March amid rising energy prices linked to the Iran war. Core CPI, which excludes variable food and energy prices, is expected to increase by 2.7% year-on-year. That would be a modest gain from 2.6% in March. As we delve into the report, we’ll be looking closely at the shelter index as affordability continues to be a pressing issue for Americans. The March report brought good news about this. Shelter was up 3% annually, matching its lowest reading since August 2021, and 0.3% monthly. Real estate is important to look at because mortgage payments often represent the largest, most unavoidable expense taken out of a buyer’s wallet. Although higher prices are felt by everyone, it is the lower income group that feels the impact especially because they end up spending a higher percentage of their money on things like housing, basic household items, and other unavoidable expenses, like fuel. However, even if high earners can easily afford the expenses, they are not immune to the emotional swings of rapid price increases. That was on display on Friday, when the University of Michigan’s report on consumer sentiment fell sharply in May. The morning after the CPI report, the April producer price index (PPI) will be released. It is not as closely analyzed as the CPI report, but we always pay attention to the PPI because it represents the change in the prices producers receive for the goods they sell. If a steel manufacturer is paid more for their hot-rolled steel, that means their customers, such as a farm implement manufacturer, see their costs rise. A customer can deal with rising input prices in one of two ways. Generally, they will try to avoid passing the cost on to the buyer temporarily. But eventually, if inflation is too much to bear, they will have to pass on those costs to protect profit margins. As a result, the PPI can help determine the likelihood of higher consumer prices in the future, making it a leading indicator of the CPI. Remember, the Federal Reserve is as concerned about consumer spending as it is setting monetary policy. That is why the core CPI and especially the personal consumption expenditure (PCE) index is taking more market attention. PCE is the Fed’s preferred inflation gauge and is usually released about two weeks after the CPI. The Fed will soon undergo a change when Kevin Warsh will replace Jerome Powell as chairman. The April jobs report on Friday came in stronger than expected, and inflation is still running comfortably above the Fed’s 2% target. That defies the path of rate cuts in the short term. Of course, what prices do and what consumer sentiment looks like doesn’t always tell the full picture of how consumers react to price increases. For that reason, we should pay attention to the April retail sales report on Thursday. That report provides an overview of the purchasing patterns of various sectors of the consumer economy. As of Friday, economists expect to see a 0.4% monthly increase, according to FactSet. The CEO of buy now, pay later company Affirm told Jim Cramer on Friday that consumers are still spending , so we’ll see if that strength shows up in official government data. Apart from these three most important releases, we will also take a closer look at the housing sector on Monday, with the release of the April existing home sales report, and at the manufacturing economy, when we get the April industrial production and energy use report on Friday. Housing data is consistent with our position at Home Depot, and manufacturing data is highly relevant to our economically critical Club names Dover, DuPont and Linde. More industrial work, better for them. Week Ahead Monday, May 1 Home Sales Available at 10 am ET Before the bell: Circle Internet Group (CRCL), Constellation Energy Group (CEG), Barrick Mining (B), Carlyle Secured Lending (CGBD), monday.com (MNDY), Mosaic (MOS) After the bell: Hims & Hers Health (MolugGAST), PLUGAST Her Health (MolugSget), PLUGAST Getty Computing (RGTI), Babcock & Wilcox Enterprises (BW), Marathon Digital Holdings (MARA) Tuesday, May 12 Consumer Price Index (CPI) at 8:30 am ET Before the bell: Qnity Electronics (Q ), D-Wave Quantum (QBTS), First Majestic Silver (PAN), First Majestic Silver (PAN), Kopin Sea Limited (SE), Achieve Life Sciences (ACHV), BETA Technologies (BETA), JD.com (JD), Acurx Pharmaceuticals (ACXP), Amentum (AMTM), eToro Group (ETOR), Lithium Argentina (LAR), Legend Biotech (LEGN), Satellogic (SATL), Under Armor (UAA) (MDELSpace Defense), MdElectERM (UAA) After the bell: (AEYE), Franco-Nevada (FNV), Nextpower (NXT), Andersen Group (ANDG), Astronics (ATRO) Wednesday, May 13 Producer Price Index (PPI) at 8:30 am ET Before the bell: Nebius Group (NBIS), Alibaba Group Holding (BABA), Dynatrace (DT), Energy Group (DT), EOSI (DT) Online Vishay Intertechnology (VSH), Wix.com (WIX) After the bell: Cisco Systems (CSCO), Enovix (ENVX), USA Rare Earth (USAR), Doximity (DOCS), GrabAGun Digital Holdings (PEW) Thursday, May 14 April Retail Sales Report at 8:30 am ET Bullitive Intuitive (LUNR) After the bell: Figma (FIG), Nu Holdings (NU), Applied Materials (AMAT), Aquestive Therapeutics (AQST) Friday, May 15 Industrial Production and Capacity Utilization at 9:15 am ET Before the bell: H World Group (HTHT), Alaska Air Group (ALK) (Jimtable I-Trust* long* See Jimtable I-Trust* full list of stocks.) 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