Stocks on Wall Street ended mostly lower on Friday, but the main indexes still managed to score their second straight weekly gain thanks to new consumer inflation data that raised hopes for a Federal Reserve rate cut next month.
Source: Investing.com
For the week, the 30-stock rose around 1.7%, the benchmark S&P 500 climbed about 0.9%, and the tech-heavy added 0.8%. The small-cap Russell 2000 Small Cap Index jumped 3.1%.
Next week is expected to be another eventful one as attention turns to the Fed’s annual Economic Policy Symposium, which will take place in Jackson Hole, Wyoming, starting on Thursday.
Investors will scrutinize a speech from Fed Chair Jerome Powell on Friday for clues on the outlook for interest rates. As of Sunday morning, investors see an of the U.S. central bank cutting rates by 25 basis points at its September meeting.
Source: Investing.com
Elsewhere, on the earnings docket, there are just a handful of corporate results due as Q2 earning season winds down, including a slew of retailers such as (NYSE:WMT), (NYSE:TGT), (NYSE:TJX), (NYSE:HD), and Lowe’s (NYSE:LOW). The tech sector has (NASDAQ:PANW), (NASDAQ:WDAY), and China’s (NASDAQ:BIDU) stepping into the earnings confessional.
Regardless of which direction the market goes, below I highlight one stock likely to be in demand and another which could see fresh downside. Remember though, my timeframe is just for the week ahead, Monday, August 18 – Friday, August 22.
Stock to Buy: Walmart
Walmart is poised to deliver robust earnings, making it a compelling buy this week. The retail giant is expected to report strong performance, driven by its strategic omnichannel initiatives and cost management efforts.
The Bentonville, Arkansas-based retailer – which operates more than 5,000 stores across the U.S. – is scheduled to deliver its second quarter earnings update before the U.S. market opens on Thursday at 7:00AM ET. Market participants predict a sizable swing in WMT stock after the print drops, according to the options market, with a possible implied move of +/-4.7% in either direction.
In a sign of increasing optimism, analysts have made substantial upward revisions to their EPS forecasts in the weeks leading up to the earnings report. Notably, 23 out of the last 28 EPS revisions have been to the upside, reflecting growing confidence in Walmart’s financial performance.
Source: InvestingPro
Consensus calls for Walmart to deliver earnings per share of $0.73, rising 9% from EPS of $0.67 in the year-ago period. Revenue is seen rising 3.9% to $175.9 billion, reflecting strong grocery sales and as more shoppers sign up for its Walmart+ membership program.
The retailer’s focus on everyday low prices has made it a go-to destination for price-conscious consumers, including higher-income households, driving consistent traffic and sales growth. Furthermore, Walmart’s online sales continue to grow rapidly, supported by its robust e-commerce platform and expanding delivery options.
Looking ahead, I believe CEO Doug McMillion will provide solid guidance for the months ahead, signaling expectations of continued strength through the back-to-school shopping season.
Source: Investing.com
WMT stock ended Friday’s session at $100.00, within sight of its record high of $105.30 reached on Feb. 14. With a market cap of $798 billion, Walmart is the world’s most valuable brick-and-mortar retailer and the 11th largest company trading on the U.S. stock exchange.
Walmart has stood apart from other retailers, with shares rising 10.7% year-to-date. That compares to a gain of 5% recorded by the Retail Select Sector SPDR Fund (XRT), which tracks a broad-based, equal-weighted index of U.S. retail companies in the S&P 500.
Additionally, Walmart posts a Financial Health Score of 2.67, which InvestingPro rates as “GOOD.” This score reflects a balanced but resilient profile: strong profitability (3.69), solid growth potential (2.98), and excellent price momentum (3.37).
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Stock to Sell: Target
On the flip side, Target faces headwinds that suggest a more cautious approach is warranted, positioning it as a stock to consider selling this week. The big-box retailer is expected to release downbeat earnings and guidance, reflecting several challenges that have hindered growth.
Target – which is the seventh largest brick-and-mortar retailer in the U.S. – is scheduled to release its Q2 earnings report ahead of the opening bell on Wednesday at 6:30AM ET. According to the options market, traders are pricing in a swing of +/-9% in either direction for TGT stock following the print.
Analyst sentiment has deteriorated significantly ahead of the report, with InvestingPro data showing 23 out of the 26 analysts covering Target reducing their profit estimates – a unanimous expression of growing concern.
Source: InvestingPro
Wall Street sees Target reporting earnings of $2.02 per share, falling 21.4% from a year earlier, while revenue is anticipated to decline by 2% to $24.9 billion. These projections indicate that Target’s sales growth is lagging behind peers, with no clear catalyst to reverse this trend in the near term.
The company is facing a plethora of headwinds, including slowing store traffic and online sales, high operating costs, shrinking margins, as well as potential pressure from proposed tariffs that could impact its supply chain and product costs.
With these headwinds—weak digital growth, competitive pressures, and tariff vulnerabilities—Target’s upcoming guidance is likely to underwhelm, potentially leading to further stock price weakness.
Source: Investing.com
TGT stock closed at $103.02 on Friday. Shares have underperformed the S&P 500 by a wide margin this year, falling -23.8%. At current valuations, the Minneapolis-based retailer has a market cap of $46.8 billion.
Target’s technical landscape is cloudy. RSI is 46.95 (neutral), but most daily and weekly signals point “sell” or “strong sell.” Momentum metrics confirm the pressure—MACD and stochastics are less supportive, and price action is stuck below key averages.
It should be noted that Target currently has an InvestingPro ‘Financial Health Score’ of 2.51 out of 5.0, underscoring recent operational and sentiment challenges.
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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF (SPY), and the Invesco QQQ Trust ETF (QQQ). I am also long on the Invesco Top QQQ ETF (QBIG), Invesco S&P 500 Equal Weight ETF (RSP), and .
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies’ financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.