Entreprise

What you need to know in this week’s market

Investors this week expect the release of corporate earnings and economic data to be a bit quieter after the US stocks rebounded last week following the long-awaited monetary policy decision of the Federal Reserve Board.

One of the hottest earnings reports will be released on Monday after the market closes from Nike (NKE). As one of the few companies to report revenue covering this year’s performance, Nike’s third-quarter performance provides up-to-date information on how to do that. Multinationals performed well in the first few months of 2022 against the backdrop of an ongoing pandemic and war in Ukraine.

Nike stocks fell more than 20% in the year leading up to Friday’s closing, below the S & P 500’s fall of more than 6% over the same period. Investors are wary of stocks that are heavily exposed to both international and ongoing headwinds. Supply Chain Issues Nike joins many other U.S.-based companies earlier this month, shrinking its business in Russia during the war in Ukraine, stopping accepting online orders, and closing Russian stores. Announced.

“3QF22 will focus on 1) supply chains including on-hand and in-transit inventories, 2) China with political backlash and COVID-19 lockdown, 3) wholesale distribution, and rationalization plans. Expect. Further; and 3) Demand remains rising in NA [North America] And EMEA [Europe, the Middle East, and Africa]”Cristina Fernandez, an analyst at the Telcy Advisory Group, wrote in a memo on Friday.

“Until inventory flows normalize, Nike’s short-term outlook is volatile, but Nike has a membership program, high-priced sales, more use of data across the organization, and more integration. We should continue to benefit from strengthening consumer ties through strategic wholesale. A model from the OneNike Marketplace initiative, “she added.

The Nike shoes worn by the Los Angeles Clippers defend Eric Bledsoe (12) later in the NBA basketball game in Denver on Wednesday, January 19, 2022. The Nuggets earned 130-128 overtime. (APPhoto / David Zalubowski)

When Nike returns to December with its last closing date and telephone, the company expects third-quarter sales to grow at low single-digit rates and full-year sales growth in mid-single digits. Said. Fernandez said he was looking forward to Nike. Repeat this guidance on Monday.

Nike is expected to achieve overall sales of $ 10.6 billion in the quarter ending February, according to Bloomberg consensus data. This represents a 3% growth compared to the same period last year. Adjusted earnings per share (EPS) reached 72 cents per share, compared to 90 cents per share last year.

Sales of Greater China, one of Nike’s main markets, fell below that threshold in the second quarter as the COVID-19 case in China affected consumer liquidity and spending. , Is expected to exceed $ 2 billion. A new outbreak of coronavirus. This could pose some downside risks to both sales and supply for Nike’s latest and future results.

“We are more and more confident that supply will normalize towards 2011,” Nike Chief Financial Officer Matthew Friend said in December.

However, supply chain concerns still come to mind for many other major companies. According to a FactSet report, 358 S & P 500 companies listed their “supply chain” at the time of their fourth-quarter earnings announcement, well above five. -187 annual average.

“This is the second highest number of S & P 500 companies quoting the’supply chain’in their revenue call, dating back to at least 2010,” FactSet’s John Butters said in a memo. It is 362 that occurred in the previous quarter (third quarter of 2021). “

Consumer sentiment

In terms of economic data, this week’s Consumer Psychology Report, released by the University of Michigan on Friday, provides the latest snapshots of consumer conditions during the rise in inflation and the geopolitical crisis in Ukraine.

The revised Consumer Survey Index for financial institutions is expected to remain unchanged from the tentative March index of 59.7, the lowest since 2011. Earlier this month, consumers expect inflation to rise 5.1% next year, the highest forecast since 1981, according to the University of Michigan.

More importantly, the consumer confidence index serves as an indicator of whether a decline in optimism will ultimately lead to a concrete decline in consumer spending, thereby putting a brake on US economic activity. Private consumption in the United States accounts for more than two-thirds of total economic activity. , And already, early signs suggest that rising prices are holding back at least some demand. February retail sales increased by just 0.3%, and Commerce Department data showed last week that they missed Wall Street’s expectations. Primarily boosted by rising energy prices — retail sales actually declined that month.

“Consumer sentiment, the Ministry of Finance yield curve, economists’ growth expectations, and investor sentiment are all showing signs of fatigue, and the recession is imminent,” Lindsey Bell, chief market and money strategist at the alliance, said on Friday. It emphasizes the possibility of approaching. ” “According to the University of Michigan, consumer sentiment has been declining since August, hitting a record low of 62.8 since 2011 in February. Values ​​below 65 often coincide with a recession.”

“It’s true that consumers are less confident and will need to keep an eye on them,” Bell said. We hope that the second half of 2022 will feature a more stable global economy and mitigation of inflationary pressures, as some of these short-term concerns can be placed behind us. “

Economic calendar

  • Monday: Chicago Fed National Activity Index, February (January 0.69)

  • Tuesday: Richmond Fed Manufacturing Index, March (Forecast 2, February 1)

  • Wednesday: MBA Mortgage Application, Week Ended March 18 (-1.2% last week), New Home Sales in February (Expected 815,000, January 801,000)

  • Thursday: First unemployed bill for the week ending March 19 (expected 211,000, 214,000 last week); Continued billing for the week ending March 12 (expected 14.81 million, previous week 1.419 million); Endurance consumption Goods, February reserve (-0.5% forecast, 1.6%) January); Orders for non-defensive capital goods excluding aircraft, February provisional version (0.5% forecast, 1.0% in January) Non-defense excluding aircraft Shipment of capital goods, February provisional edition (0.5% forecast, January 1.9%); S & P Global US compound PMI, March provisional edition (54.2 forecast, February 55.9), Kansas City Federal Manufacturing Activity Index , March (29 in February)

  • Friday: Pending Home Sales, February (Forecast 1.0%, January-5.7%); University of Michigan Sentiment, Last March (Forecast 59.7, February 59.7)

Revenue calendar

Monday

After market closure: Nike (NKE)

Tuesday

Before market opening: Carnival Corp. (CCL)

After market closure: Adobe (ADBE)

Wednesday

Before market opening: General Mills (GIS)

Thursday

After market closure: Darden Restaurant (DRI)

Friday

No notable reports to be released

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Emily McCormick is a Yahoo Finance reporter. Follow her on Twitter: @emily_mcck

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