Stock Market Rallies Toward Nvidia, Land’s End, NetApp Reports

Heading into the final stretch of August, the month has been two weeks down, two weeks up — just enough to put the S&P 500 on track toward its best August in three years. Earnings season is about to slow to a crawl, but a late Wednesday report from Nvidia (NVDA), along with Wednesday reports from data storage leaders Pure Storage (PSTG) and NetApp (NTAP), could provide some tech-sector fireworks. Retailers are likely to dominate much of the week’s day-to-day action, with growth stocks Abercrombie & Fitch (ANF), Land’s End (LE) and Burlington Stores (BURL) among those due.

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Nvidia Earnings Are A Key Test For The Stock Market Rally. Here’s What To Expect.

Stocks To Watch: Many Stocks Right At Buy Points

With the market rally gaining momentum and Fed chief Jerome Powell confirming rate cuts are coming, investors should be looking to add exposure. In an expanding market, the best way to do that is to scan leading stocks across a variety of sectors. Meta Platforms (META), Shift4 (FOUR), Insmed (INSM), On Holding (ONON) and Freshpet (FRPT) are all trading right around buy points, with strong technical action. Freshpet and On Holding both broke into buy zones on Friday. Meta’s base formed around its first rebound from 200-day support since February 2023. Shift4 remained below its entry.

Economic Calendar: Finally Putting A Bridle On Inflation

More good news on inflation is expected in the final week of August as the Commerce Department releases the Federal Reserve’s primary inflation gauge for July as part of Friday’s personal income and outlays report. Tame consumer price index and producer price index data for July have led economists to forecast that the core PCE price index will rise between 0.1% and 0.2%. That should lower the 3-month annualized core inflation rate to 2% or lower for the first time since December. Personal income is seen rising a below-trend 0.2% after the soft July jobs report, while personal spending is forecast to rise a strong 0.5% amid a bounce in retail sales.

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Technology Leaders: Nvidia Faces A High Hurdle

Artificial intelligence chip leader Nvidia plans to announce its fiscal second-quarter results late Wednesday. Wall Street expects the Santa Clara, Calif. outfit to earn 64 cents a share, up 137% year over year, on sales of $28.65 billion, up 112%, in the July-ended quarter. That would mark its fifth straight quarter of triple-digit percentage gains in sales and earnings on a year-over-year basis amid white-hot demand for its AI processors for data centers. Analysts will focus on supply constraints for Nvidia’s current-generation Hopper processors and possible delays for its next-generation Blackwell processors. Shares are about 10% below a buy point, and up 161% so far this year.

Cybersecurity: Getting Beyond The Blue Screen Of Death

CrowdStrike (CRWD) reports Wednesday in the wake of its widespread IT outage on July 19. Amid the stock’s retreat, estimates have come down, particularly for subscription-based next-generation annual recurring revenue. Analysts estimate adjusted EPS of 97 cents per share, up 31%, vs. 63% growth in the April quarter. Revenue is expected to climb 31%.

A Shakeout Week For Retailers?

In Nvidia’s shade, retail earnings are likely to drive a lot of the stock market’s underlying action in the coming week. A number of those will be big name laggards, like Lululemon Athletica (LULU) and Ulta Beauty (ULTA). But strong performers Land’s End and Burlington bear optimistic forecasts. Abercrombie & Fitch, up 124% through May, is seen notching slower, but still triple-digit, earnings growth. Nordstrom (JWN), Gap (GPS), Foot Locker (FL) and others also report.

Data Storage Leaders Basing Ahead Of Reports

Rival enterprise data storage firms NetApp and Pure Storage report July-quarter earnings late Wednesday. For Pure Storage, analysts expect earnings to increase 8% year-over-year to 37 cents per share. Sales are expected to grow 10% to $756 million. Analysts expect NetApp earnings of 1.45 per share, up 26%. Sales are seen rising 7% to $1.53 billion. Pure Storage stock has surged nearly 80% this year while NetApp stock is ahead 54%.

Dollar Stores: Gauging Consumer Stress

Discount retailers and variety stores announce earnings next week. Five Below (FIVE) is set to report late Wednesday, followed by Dollar General (DG) and Ollie’s Bargain Outlet (OLLI) on Thursday. FactSet expects Five Below earnings to fall nearly 36% to 54 cents per share on 8.3% revenue growth to $822 million. The results would mark two straight quarters of accelerating earnings declines and slowing sales growth. Analysts estimate Ollie’s Bargain Outlet earnings will increase 16.4% to 79 cents per share, while revenue rises 9% to $562 million. OLLI stock rallied nearly 30% in 2024. Forecasts call for Dollar General earnings to fall 15.5% to $1.80 per share on about 6% sales growth to $10.38 billion. DG shares are down more than 9% this year.

Stock Market Earnings Briefs

Heico (HEI) releases its Q3 results late Monday and will host its conference call early Tuesday. FactSet expects the maker of defense components to report a 24% earnings rise to 92 cents per share on nearly 38% revenue growth to $995 million. That would mark three quarters of accelerating earnings growth, while sales gains have slowed over the period. HEI stock rallied about 38% in 2024 and trades at record highs.

Box (BOX) will report July-quarter earnings on Tuesday. Analysts polled by FactSet expect the cloud-based file-sharing company to post an 11% earnings increase to 40 cents per share on an adjusted basis, with sales up 3.4% to $270 million. Box stock has gained 10% so far in 2024 but is down 6% from 12 months ago.

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Donaldson (DCI) reports fiscal Q4 results before the stock market opens Wednesday. Analyst consensus has EPS growing 14% to 89 cents with sales up 7% to $943 million, says FactSet. For the fiscal year, analysts see earnings jumping 10% to $3.37 per share on revenue of $3.59 billion, 5% above last fiscal year. DCI stock is about 2% below an official 75.10 buy point.

Autodesk (ADSK) will release its Q2 results after the stock market closes Thursday. Analysts expect the maker of software for computer-aided design and workflows to earn $2 a share, up 5% year over year, on sales of $1.48 billion, up 10%.

Birkenstock (BIRK) reports early Thursday. Analysts forecast a 24% EPS increase to 57 cents on a 22% revenue gain to $628.9 million. The German maker of cork-soled sandals came public last October. The stock topped a 61.83 flat-base buy point on Aug. 15, ahead of the quarterly report. It’s up 35% from the IPO price of $46 per share. The company has benefited from higher pricing and rising U.S. demand. It’s reporting for the June quarter, a warmer season when people tend to buy its “fashionably ugly” open-toed shoes more.

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