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Stock Market Week Ahead: Fed Hosts Pivotal Decision; Nike, FedEx Earnings on Tap

Published 03/17/2024, 02:30 AM
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  • The Fed is expected to maintain interest rates at its March 20 meeting. Recent U.S. inflation reports have reduced expectations for a rate cut by June.
  • Nike & FedEx to report Q3 earnings on March 21. Nike faces challenges, leading analysts to lower EPS forecasts. FedEx's Fair Value analysis suggests a potential upside.
  • TikTok potential ban: Passed by the U.S. House, the bill requires ByteDance to sell TikTok or face a U.S. ban, with a 165-day window for legal challenge post-signature by President Biden.
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  • Here's your Pro review of the main events in the stock market for the week ahead.

    FED Interest Rate Decision

    The Federal Reserve is scheduled to meet on March 20 to make a decision on interest rates, with widespread anticipation of no changes in rate policy just yet.

    Last week, equity markets faced challenges following reports on U.S. consumer and producer prices showing persistent inflation, reducing expectations that the Fed might cut interest rates by its June meeting.

    Investors will pay close attention to the Fed's projections for interest rates and statements from Fed Chair Jerome Powell for indications of upcoming monetary policy directions.

    This event has the potential to severely impact S&P 500 price projections for the year. Stay tuned.

    Nike & FedEx Earnings Preview

    Nike (NYSE:NKE) and FedEx (NYSE:FDX) are scheduled to release their Q3 earnings on March 21, after the market close.

    Wall Street is predicting an EPS of $0.75 and revenue of $12.28 billion for Nike. This week, a few analysts have revised their price targets for Nike downwards. For example, Citi adjusted its price target to $125 from $135, while still recommending a Buy.

    Citi pointed out several issues Nike is currently facing, including a decline in market sentiment about its revenue outlook since its Q2 earnings announcement. Challenges such as excess inventory in North America, despite better inventory management, and persistently high promotional activities, as well as retailers' cautious ordering, were noted.

    Additionally, economic instability in China and Europe, along with increased competition from Adidas (OTC:ADDYY), which is regaining market share, adds to Nike's pressures.

    InvestingPro’s EPS Forecast Trend depicts the trend in analyst EPS forecasts for Nike for the upcoming quarter. Analysts have reduced this quarter's expectations by 5.4% for EPS from 0.80 per share to 0.76 per share over the last 12 months. The reduction was primarily after the Q2 report in December 2023.

    NKE

    For FedEx, consensus estimates for Q3 stand at $3.53 for EPS and $21.99B for revenues.

    Recently, some analysts have also reduced their price targets for FedEx. Goldman Sachs, for instance, decreased its price target to $291 from $293, maintaining a Buy rating.

    The revision reflects anticipated softness in B2B activities, a shift towards more economical international shipments over priority ones due to weak global economies, and potential impacts from severe weather conditions in January mentioned by several transport companies during the Q4 earnings season.

    However, InvestingPro's fair value analysis suggests FedEx's stock price could see an upward potential of about 12%, with Wall Street analysts forecasting a rise of around 16%.

    FDX

    Proposed TikTok Ban

    On Wednesday, the U.S. House of Representatives passed a bill requiring ByteDance, the Chinese owner of TikTok, to divest the platform within six months or face a ban in the United States.

    The bill is now set to proceed to the Senate, where its future is less certain due to a divided opinion among senators regarding the measure.

    The legislation allows ByteDance, which boasts approximately 170 million American users, a period of 165 days to file a legal challenge following the bill's signing by President Joe Biden, who last week indicated his intention to do so.

    TikTok's CEO, Shou Zi Chew, stated last week that the company would pursue legal action if necessary.

    ***

    Be sure to check out InvestingPro to stay in sync with the market trend and what it means for your trading. As with any investment, it's crucial to research extensively before making any decisions.

    InvestingPro empowers investors to make informed decisions by providing a comprehensive analysis of undervalued stocks with the potential for significant upside in the market.

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    Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple points of view and is highly risky and therefore, any investment decision and the associated risk remains with the investor.

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