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Investors will likely see another volatile week in equities when they return from the long Labor Day weekend, as hopes of a policy pivot from the Federal Reserve faded after another strong jobs report on Friday.
The recent labor-market data added to the evidence that the economy is robust enough to withstand more tightening, causing equities to come under fresh selling pressure after the strong summer rally.
Fed chairman Jerome Powell warned in a recent speech that people should expect some economic pain as it tries to bring inflation down toward its 2% target, which remains the central bank’s “overarching focus right now.”
Stocks were lower in the past week with the S&P 500 suffering its longest weekly losing streak since mid-June.
With these macroeconomic pressures, here are three stocks on our radar during the holiday-shortened trading week:
1. GameStop
GameStop (NYSE:GME), the video game retailer stock favored by retail investors active on social media channels, will report its second-quarter earnings after the market close on Wednesday, Sept. 7. Analysts, on average, are expecting a loss of $0.41 a share on sales of $1.27 billion.
Ryan Cohen, who joined the GME board and became chairman last year, has been trying to revive growth, which has slowed as gamers have shifted from buying game discs to digital downloads.
Source:Investing.com
Last year, GameStop was at the center of a months-long, social-media-fueled trading frenzy. The company revamped its leadership to help it diversify its business and return to profitability, but the results so far haven’t been as dramatic as last year's rally had been.
GME stock, which closed on Friday at $27.36, is down about 26% this year in a highly volatile trading pattern.
2. Kroger
Supermarket behemoth Kroger (NYSE:KR) is scheduled to report its Q2 2022 earnings on Friday, Sept. 9 before the market opens. Analysts are expecting a $0.7954-per-share profit on sales of $34.23 billion.
In June, Kroger said grocery shoppers are “aggressively” turning to cheaper store brands as they cope with the highest inflation in four decades. Same-store sales for Kroger-branded products, however, rose 6.3% in the first quarter, faster than the overall sales growth. At that time, Kroger also raised its full-year guidance, saying it now expects identical sales to grow by 2.5% to 3.5%.
Source: Investing.com
Kroger's earnings report is set to come after other retailers' warnings that they’re still struggling to get rid of the higher inventories they have accumulated this year as consumers have shifted their spending patterns following the pandemic-triggered buying spree.
Kroger stock, which closed on Friday at $48.43, has lost about 23% from its April highs.
3. CVS Health
Shares of pharmacy giant CVS Health (NYSE:CVS) may see some action this week on reports that the chain is in advanced talks to acquire the home-healthcare company Signify Health (NYSE:SGFY) for around $8 billion.
The Wall Street Journal reported on Friday that CVS is ahead of other potential bidders, including Amazon.com (NASDAQ:AMZN) and UnitedHealth (NYSE:UNH), which had been circling Signify for a deal that could be announced soon.
Source: InvestingPro+
Signify works with a large group of doctors to facilitate house calls, using analytics and technology to help physician groups, health plans, employers, and health systems with in-home care. It also offers health evaluations for Medicare Advantage and other plans, according to WSJ.
CVS shares, which closed on Friday at $99.44, have held up well in the current market downturn, falling over 3% this year.
Disclosure: The writer doesn’t own shares of the companies mentioned in this report.
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