Upgrade With Price Target Of $400
- Instacart IPO Coming
- Possible UAW Strike?
Stocks finished in the red last week as the S&P 500 fell 1.3% and Nasdaq Composite dropped 1.9%. If there was a bright spot though it was that stocks did notch gains, albeit small, on Friday. Those gains ended a three and four day losing streak for the S&P and Nasdaq Composite, respectively. The gains came despite significant losses from Apple
Heading into this week, there are a few things worth noting. An article in today’s Wall Street Journal says analysts are increasing their expectations for earnings in the third quarter. Forecasts are now calling for earnings to increase 0.5%. That’s good news for market fundamentalists who are eyeing the market’s price-to-earnings multiple of 18.7, which is slightly above its 10 year average 17.7. The increasing expectations come as Morgan Stanley
Instacart is looking to go public, possibly as early as next week. The grocery delivery company, which was previously valued at $39 billion, is now targeting a valuation of just $8.6 to $9.3 billion. Despite the drop in valuation, seeing a bit of activity in the IPO market is an encouraging sign. In potential merger news, according to published reports J.M. Smucker’s is in talks to acquire Twinkie maker, Hostess Brands
There are a few other potential big stories developing. On Wednesday, we’ll get a look at the latest Consumer Price Index (CPI). Forecasts are calling for prices to be up 0.5% month-over-month and higher by 0.2% year-over-year. Then on Thursday, both the Producer Price Index (PPI) and Retail Sales reports will be released. PPI is expected to show an increase of 0.4% month-over-month and Retail Sales are forecast to have increased 0.2%.
The slowdown in inflation but strong economy could face a challenge later this week. United Auto Workers (UAW) are threatening to go on strike as early as Friday, when their current contract is set to expire. 146 thousand workers from Ford, GM and Stellantis could all strike, bringing the auto industry to a screeching halt. According to an article from Bloomberg, the auto industry accounts for about 3% of U.S. GDP and a strike there could have significant implications for Michigan’s economy.
For today, there isn’t much on the docket. Oracle will report earnings after the close and I’ll be curious what their forward looking guidance looks like. In premarket activity, the S&P 500 is higher by 0.5% and volatility is lower by a little less than 1.5%. I find it interesting that despite markets being down on the week, volatility really hasn’t moved and continues to hover around 14. That is below its historical average and a sign markets are not too concerned about much of anything.
Finally, it’s hard to believe it’s been 22 years since America was attacked. Nearly 3,000 people perished that Tuesday morning. I just want to take a moment to remember those we lost. We will never forget.
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