CPI inflation, retail sales, producer prices, and retailer earnings will be in focus this week.Deere is a sell amid shrinking EPS, disappointing guidance on deck.U.S. stocks finished mostly higher on Friday to close out another winning week amid investor optimism that the Federal Reserve will cut interest rates at some point this year.The week ahead is expected to be another eventful one as investors continue to look for more cues on the prospects for potential rate cuts.
As of Sunday morning, financial markets see a roughly 60% chance of the Fed cutting rates in September, according to the Investing.com According to the options market, traders are pricing in a swing of 4.2% in either direction for WMT stock following the report. Shares added 2% after its last earnings report in February.Walmart is expected to post earnings per share of $0.52, a tad higher than EPS of $0.49 in the year-ago period. Despite seeing 17 of the 23 analysts surveyed by InvestingPro downwardly revise their profit forecast ahead of the report, estimates are still higher than they were previously.
Despite a challenging environment for retailers, Walmart is seen benefitting from ongoing changes in frugal consumer behavior amid the current economic backdrop of elevated inflation and high interest rates. Underscoring several near-term headwinds facing Deere, 13 out of the 17 analysts surveyed by InvestingPro slashed their EPS and sales estimates ahead of the print as Wall Street turned bearish on the tractor maker’s prospects.
As such, it is my belief that Deere’s management will disappoint investors in their forward guidance and strike a cautious tone given the uncertain outlook for farm and mining machinery sales due to the challenging operating environment.Shares are up just 2% in 2024, underperforming the broader market by a wide margin over the same timeframe.
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