Wall Street Poised for Ninth Consecutive Day of Gains: Key Stocks to Watch
Wall Street is set for a quiet open on Tuesday, August 20, with the S&P 500 and Nasdaq Composite looking for their ninth straight day of gains. This would mark their longest winning streaks since late 2023. However, after Monday’s positive movement, the S&P Short Range Oscillator, a popular momentum indicator, has entered overbought territory, signaling potential caution. Here are ten key stocks and events to watch for on Tuesday:
Key Takeaways
- Bullish Market Momentum: The S&P 500 and Nasdaq Composite are on a long winning streak, pointing to a bullish market sentiment. However, overbought signals from the S&P Short Range Oscillator suggest investors may be taking a pause.
- Eli Lilly’s Obesity Drug Shows Strong Results: Eli Lilly‘s obesity drug Zepbound has shown impressive results, demonstrating a significant reduction in type-2 diabetes risk for obese and overweight individuals with pre-diabetes. These findings could lead to greater insurance coverage for the drug, boosting Eli Lilly shares.
- Palo Alto Networks Exceeds Expectations: Palo Alto Networks reported better-than-expected quarterly results, indicating a strong position in the cybersecurity market. The company’s emphasis on “platformization," a strategy of bundling cybersecurity solutions, is gaining traction and analysts are focusing on remaining performance obligation (RPO) as a key metric.
- Lowe’s Forecasts Lowered: Lowe’s lowered its full-year forecast for revenue, comparable sales growth, and earnings. This decline is attributed to fewer optional home projects and weather-related impacts on seasonal purchases. A robust housing market, potentially driven by a Federal Reserve rate cut, could benefit both Lowe’s and its competitor, Home Depot.
- Foot Locker’s Earnings Report Looms: Citigroup raised its price target on Foot Locker, though maintaining a neutral rating. Analysts foresee a balanced risk-reward scenario leading up to the company’s earnings report next week. Positive performance from brands like New Balance, Hoka, and On offsets weakness in Nike.
Key Stocks and Events to Watch:
Pharmaceuticals and Healthcare:
Eli Lilly & Co. (LLY): The company’s obesity drug, Zepbound, has demonstrated significant potential, reducing the risk of developing type-2 diabetes by over 90% in patients with pre-diabetes. The robust data could lead to increased insurance coverage for the drug, driving growth for Eli Lilly.
Technology:
Palo Alto Networks (PANW): Their recent better-than-expected quarterly results position them strongly in the cybersecurity market. The company’s "platformization" strategy, bundling cybersecurity solutions, is gaining traction and driving growth. Analysts are increasingly looking at remaining performance obligation (RPO) as a key performance indicator.
Advanced Micro Devices (AMD): Edward Jones initiated coverage of AMD with a "buy" rating, highlighting its potential for significant growth. The firm cites AMD‘s strong data-center business, particularly for AI chips, and its ability to leverage the Xilinx acquisition for further growth.
Retail:
Lowe’s Companies (LOW): The home-improvement retailer lowered its full-year forecast due to fewer optional home projects and weather-related impacts on seasonal purchases. A robust housing market, potentially stimulated by a Federal Reserve rate cut, could benefit Lowe’s.
Foot Locker (FL): Citigroup increased its price target for Foot Locker, although it maintained a neutral rating. The company’s upcoming earnings report is anticipated to represent a balanced risk-reward opportunity. Strong performance from brands like New Balance, Hoka, and On offsets the weakness in Nike.
TJX Companies (TJX): The off-price retailer, known for its consistent performance, is set to report earnings on Wednesday. The stock can be volatile around its quarterly releases.
Burlington Stores (BURL): JPMorgan raised its price target for Burlington Stores, predicting significant outperformance in same-store sales estimates.
Abercrombie & Fitch (ANF): Citigroup initiated a positive catalyst watch on Abercrombie & Fitch ahead of its earnings report on August 28. The firm anticipates another strong earnings beat, fueled by margin expansion. Abercrombie & Fitch shares have skyrocketed over the past year.
Other Sectors:
Estee Lauder Companies (EL): The cosmetics maker’s disappointing fiscal 2025 guidance has caused a decline in its stock price. Its planned CEO departure is not happening soon enough to alleviate investor concerns.
Boeing (BA): The aircraft manufacturer has paused test flights of its 777X plane due to structural damage identified in one of the jets. The impact on the delivery timeline for the wide-body aircraft remains uncertain.
Conclusion:
Tuesday, August 20, promises to be an interesting day on Wall Street. While the overall market sentiment remains positive, investors should be mindful of potential overbought signals and exercise caution. The performance of key sectors like pharmaceuticals, technology, and retail will be closely watched, with several earnings reports and company announcements to come. Investors should stay informed and make their investment decisions based on comprehensive market research and their individual risk tolerance.
Please Note: This article is for informational purposes only and does not constitute financial advice. It is essential to conduct thorough research and consult with a qualified financial professional before making any investment decisions.
