US stocks edged lower on Monday as investors braced for a Federal Reserve policy decision and key inflation data in the week ahead, with Nvidia (NVDA) and Apple (AAPL) events in immediate focus.
The Dow Jones Industrial Average (^DJI) hovered just below the flatline, coming off a muted end to a winning week for the three major gauges. The S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) each fell around 0.2% and 0.3%, respectively.
Stocks are treading water after signs of strength in a mixed May nonfarm payrolls report reinforced bets that the Fed will keep interest rates at a two-decade high for longer. Trader expectations for a cut in September have fallen, while those for November have risen, according to the CME FedWatch tool.
Investors are now looking ahead to the Fed’s next rate decision and May’s Consumer Price Index inflation reading, both due on Wednesday, that will provide another big test for stocks.
In the meantime, eyes are on Nvidia’s (NVDA) stock split and a key Apple (AAPL) event as catalysts for stocks on Monday.
Monday also brings the first day of Apple’s most highly anticipated developers conference in years, where CEO Tim Cook is expected to reveal a big push into AI to catch up with rivals.
Elsewhere, investors kept a watchful eye on potential fallout from political upsets in Europe. France’s President Macron called a snap national election after a trouncing from the far right in Sunday’s EU-wide vote, while Germany’s leader also suffered a crushing defeat. The euro (EUR-USD=X) slumped to its lowest level in a month, while the Paris stock index (^FCHI) sank around 2%.
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Stocks open lower ahead of big week
US stocks edged lower to kick off a busy week on Wall Street that includes a Federal Reserve policy decision and key inflation data.
The Dow Jones Industrial Average (^DJI) hovered just below the flatline, coming off a muted end to a winning week for the three major gauges. The S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) each fell around 0.2% and 0.3%, respectively.
Your top retail stock in election season…
JP Morgan is digging into retail names, and has emerged with its top play into an uncertain election season.
No surprise that it’s Walmart (WMT), which is hot off a well-received annual shareholder meeting last week that saw it add Chipotle (CMG) CEO Brian Niccol to its board.
Here’s more behind JPM analyst Chris Horver’s Walmart upgrade:
“We believe the stock adds a strong balance of defense and offense on both the top and bottom lines in a soft (to softening) consumer backdrop with a highly uncertain 2H24 ahead. Moreover, we believe estimates remain beatable while there is the potential for an uptick in the multiple as we expect WMT to go on a multi-year double-digit EPS growth algo given market share gains, rising alternative profit pool benefits, and International segment profit inflection.”
RBC markets note making the rounds this AM
Good note from veteran strategist RBC Lori Calvasina is making the rounds this morning.
“We continue to worry that market participants have gotten a little too optimistic about the timing of cuts. Friday’s jobs report didn’t do anything to alter that view given the strength of the payrolls number,” Calvasina says.
She goes onto “stress test” her models, leaving her with two conclusions worth considering.
“One stress test bakes in no further Fed moves, stickier-than-expected inflation, and 10-year yields that don’t quite make it above 5%. That stress test points to around 4,900 on the S&P 500 on our EPS forecast and nearly 5,100 on consensus EPS,” writes Calvasina.
She adds, “Another stress test bakes in a few more hikes, hotter inflation that breaks well above 3% on PCE, and a 10-year yield well north of last year’s high to 5.5%. That stress test pulls the trailing P/E down to 19.1x and points to about 4,500 for fair value for the S&P 500 on our EPS forecast and the 4,600-4,700 range using consensus EPS.”
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