For investors, the past week was a wake-up call. Other than the lingering U.S.-China trade dispute, many also realized there are additional risks starting to slowly pile up which have the potential to derail both the bull market in equities and the U.S. economy in general.
Growing geopolitical tensions in the Middle East, a post-Brexit mess in the U.K., and the weakening economic data in the U.S.—all combined with the ongoing trade impasse—has kept investors nervous and caused equities to continue their losing streak.
The Dow Jones Industrial Average dropped 0.7% last week, posting its fifth consecutive weekly decline, the longest negative streak for the mega cap index since 2011. With the macro environment likely to remain uncertain in the coming days, we're keeping an eye on three stocks that could move due to earnings reports and/or developments in their sectors.
1. Costco Wholesale
The recent escalation in the trade tariff tit-for-tat has clearly taken its toll on investor sentiment. Now there are signs that it has started to hit some of the strongest pillars of the markets, such as retail stocks.
Once again the retail sector will come under scrutiny when Costco Wholesale (NASDAQ:COST) reports its fiscal 2019 third-quarter results on Thursday, May 30 after the close. Analysts are expecting $1.82 a share in profit for the period that ended on May 13, on sales of $34.65 billion, according to Investing.com data.
Given the weak showing by some top retailers during their recently concluded quarters, chances are that Costco will offer a cautious outlook for the remainder of the year. The company’s future guidance will be more important for investors at a time when cost pressures are rising because of the U.S.-China tariff hikes that have started to pinch retailers who import products from China.
As well, there is growing evidence from recent economic reports that the U.S. economy is losing some steam. If that slowdown persists, it could hurt consumer sentiment as the year progresses. So far, however, Costco stock has remained an investor favorite. Closing at $247.30 on Friday, it has come back strongly from the December low, surging more than 30%.
2. Apple Inc.
Among the top technology stocks, represented by the so-called FAANG group, Apple (NASDAQ:AAPL) is one that’s being hurt the most from the ongoing U.S.-China trade war. Shares of the iPhone manufacturer have fallen about 14% in the past one month, closing at $178.97 on Friday.
The stock weakened even further last week when several analysts raised concerns over the company’s exposure to China. The stock ended the week down 5.3%.
Investors might get some sort of reprieve in the coming week if the U.S. and China soften their stance and agree on the resumption of stalled negotiations. China is Apple’s third largest market. In the most recent full fiscal year, the company saw nearly $52 billion in sales.
Worries over the trade war's affect on Apple intensified after the U.S. blacklisted Huawei Technologies Co. last week, raising fears that China will retaliate by targeting Apple and its supply chain which relies fairly heavily on Chinese manufacturing sources.
3. Dell Technologies
Dell Technologies Inc. (NYSE:DELL) will issue its first quarterly results since it re-entered the public markets last December. The report will be released onThursday after the market close; on average, analysts are expecting $1.21 earnings per share profit on sales of $22.27 billion.
In its forecast for fiscal 2020, Dell had warned that sales growth will slow over the next year, hurt by the global economic issues that may weaken corporate demand for the company’s hardware products. Last year, Dell consistently generated strong hardware sales, as the company prepared to transition back to the public markets after five years of restructuring aimed at cutting back debt and simplifying a tangled corporate structure.
Investors have liked the restructured Dell, sending its shares 45% higher this year, when compared with a 13% expansion in the S&P 500 during that period. The stock closed at $66.12 on Friday.