Heres your Investing Action Plan: what you need to know as an investor for the coming week.
Fallout from the UKs vote to leave the European Union will consume markets, with attention turning to a meeting of top central bankers. Departing British Prime Minister David Cameron will also face EU counterparts. Nike (NKE) and Micron (MU) lead a trickle of earnings reports, while Lockheed Martin (LMT), Northrop Grumman (NOC) and Verizon Communications (VZ) could offer shelter from the storm.
Janet Yellen, Peers To Gather
On Wednesday, the European Central Bank will hold a conference in Sintra, Portugal, featuring Federal Reserve Chair Janet Yellen, European Central Bank President Mario Draghi, Bank of England Governor Mark Carney and their Brazilian counterpart Alexandre Tombini.
The event will provide an opportunity for the worlds monetary policy leaders to comment on the turmoil following the Brexit vote and try to soothe fears over the global economy. On Friday, Carney pledged $345 billion in additional liquidity for the financial system to address a period of uncertainty and adjustment.
Also Friday, the Federal Reserve said it is prepared to provide dollar liquidity through its existing swap lines to ease pressure in global markets, and the Group of 7 of industrialized countries said its central banks also stand ready to use established liquidity instruments.
The conference in Portugal comes amid concerns that central bankers have nearly exhausted their options to stimulate growth via extraordinary measures like near-zero or negative interest rates, as well as massive bond buying.
EU Tries To Regroup
Leaders from the 28 EU member countries will hold a previously scheduled European Council meeting in Brussels on Tuesday and Wednesday, with the UKs Cameron expected to attend.
The heads of state will also meet without Cameron on the sidelines of the gathering. Seeking to discourage any other EU members from leaving, they are expected to be tough on the UK as separation terms are negotiated over the next few years. Members of far-right parties in France and the Netherlands have already called for votes similar to the Brexit referendum.
Some EU officials are calling on the UK to invoke the exit clause in the EU pact as soon as possible to minimize further uncertainty, though British officials have signaled they need more time to prepare.
Nike Earnings May Drop
When the athletic apparel giant reports Tuesday after the close, analysts expect Q4 EPS to dip a penny, or 2%, to 48 cents. That would be the first earnings decline in more than two years. Revenue is seen growing 6% to $8.27 billion, marking the sixth consecutive quarter of single-digit growth.
The report comes amid signs of tougher competition from rivals like Under Armour (UA) and Adidas, which has seen a resurgence recently.
Expect analyst chatter to focus on futures orders, growth in China and emerging markets, the possible inventory impact of Sports Authoritys bankruptcy, and sluggishness in the broader basketball shoe market. Nike management may discuss marketing strategy and expenses ahead of the 2016 Summer Olympics in Brazil.
Stocks To Watch
Google owner Alphabet (GOOGL) is facing a bad omen while Lockheed Martin, Northrop Grumman and Verizon are near buy points.
Alphabets 50-day and 200-day moving averages have crossed, a bearish signal that indicates the stocks short-term price action is lagging its long-term performance. Shares, which recently breached support at their 200-day line, are trading 15% below their early February high.
Defense giants Lockheed and Northrop may be defensive stock plays during the post-Brexit volatility, as global security needs prop up demand for weapons. Shares of Lockheed, which makes the F-35 stealth fighter, dipped 0.1% Friday to 239.70, still near a 245.47 buy point from a flat base. Northrop, which makes the Global Hawk drone and is a top F-35 supplier, fell 0.9% to 212.71, within striking range of a 218.94 buy point.
Verizon is trading just under a 54.59 buy point from a cup base, with the stock having steadily risen 11% from its low reached about a month ago. The stock touched a record high Friday before closing down 0.4% at 54.43.
Key Economic Indicators
The Institute for Supply Management will release its June manufacturing activity index on Friday at 10 am ET. Economists expect it to show little change from Mays 51.3 reading, with a slight dip to 51. But that would mark the fourth straight month the ISM gauge has indicated expansion, signaling factories have stabilized since a drop in the dollar eased export woes and a rally in oil lifted the energy sector. But the outlook may darken as the dollar jumps and and oil retreats on Brexit fears.
On Wednesday, the Commerce Department is expected to report a 0.4% increase in May consumer spending, cooling from Aprils 1% monthly surge. Personal income is seen up 0.3%, down from 0.4% in the prior month. The forecast for the Feds preferred inflation gauge is for a 0.2% uptick — steady vs. Aprils pace. Wage and price growth are key indicators, as central bankers weigh another rate hike.
Auto Sales Cooling Off
Automakers will report June US sales throughout the day on Friday. The annualized pace is expected to slow to 17.2 million units from 17.45 million in May. Some auto industry executives and analysts earlier this year said they see signs the industry is plateauing after several years of robust growth.
A month ago, General Motors (GM) said May sales plunged 18%, as the auto giant withdrew from lower-margin rental fleet sales. Ford (F) sales fell 6%, Fiat Chrysler (FCAU) reported a 1% increase, Toyota (TM) sales skidded 9.6% lower, and those of Nissan (NSANY) dipped 1%.
Micron Technology reports fiscal Q3 results Thursday, and sales are expected to drop for the fifth consecutive quarter, as the largest US dynamic random-access memory chipmaker notches a second straight loss amid a PC sales drought.
For Q3, Micron is expected to report $2.96 billion in sales, down 23% year over year, and a 9 cent per-share loss minus items, swinging from a 54 cent profit in the year-earlier period. For Q4, analysts see a return to profitability — 3 cents a share — but thats still far from the 37 cents a share it posted last year.
Highly Rated Companies
IBD 50 stock Acuity Brands (AYI) will announce Q3 results on Wednesday. Analysts expect the LED lighting firm to report a 48.2% jump in earnings to $2.03 per share and a 24% increase in revenue to $847.8 million.
Paychex (PAYX), which has a 94 Composite Rating, is slated to announce Q4 results early Thursday. The payroll processing and HR services company is seen reporting an 11.4% jump in earnings to 49 cents per share and an 8.6% rise in revenue to $751.5 million. Paychex shares remain in buy range despite Fridays sell-off.
Constellation Brands (STZ) reports Thursday, and Q1 per-share profit is expected to rise 21% to $1.52 on 12% revenue growth to $1.83 billion. The beverage makers brands include Corona and Modelo Especial beer, Robert Mondavi wine and Svedka Vodka.
Packaged Food Giants
General Mills (GIS) will report fiscal Q4 results Wednesday before the market opens. Consensus is for the maker of Cheerios cereal, Progresso soups and other shelf-stable foods and snacks to report a 20% decline in EPS to 60 cents and a 10.2% drop in revenue to $3.86 billion. Last year, it completed the sale of its Green Giant frozen vegetables line to Bamp;G Foods for $765 million.
ConAgra (CAG), which makes shelf-stable and prepared frozen foods under Marie Callenders, Chef Boyardee and other brands, is slated to report fiscal Q4 earnings early Thursday. Wall Street projects a 12% dip in EPS to 52 cents on a 30% decline in sales to $2.89 billion. On Feb. 1, ConAgra completed the sale of its private label operations to TreeHouse Foods for $2.7 billion cash.
ConAgra is in the process of splitting itself into two independent companies, one comprised of its consumer-branded products and the other focused mainly on its frozen potato products. ConAgra expects to complete the split by this fall.
Seasonings, spices and sauces maker McCormick (MKC) and Olive Garden parent Darden Restaurants (DRI) are also on tap to report results Thursday.