What to Expect in the Week Ahead (Fed Decision; Earnings from FedEx and Lennar)

Moomoo Breakfast US joined discussion · Sep 15, 2024 17:12

What to Expect in the Week Ahead (Fed Decision; Earnings from FedEx and Lennar)

The stock market wrapped up a robust week, with major indexes posting their best performances of the year. The S&P 500 rose 4%, while the Nasdaq Composite surged 5.9%. The Dow Jones Industrial Average also gained 2.6% during the period. Tech and semiconductor giants drove the rally, with Super Micro Computer and Arm Holdings adding 3.4% and 5.9%, respectively. Alphabet advanced 1.8%, and Uber jumped more than 6%.

“Investors are on guard for further bouts of volatility, particularly given the expectations surrounding the Fed meeting,” said Quincy Krosby, chief global strategist for LPL Financial. She noted that based on historical patterns, stocks typically have their roughest performance of the year during the second half of September.

Fedex Earnings Preview

$FedEx (FDX.US)$ is set to release its quarterly earnings on Thursday after the market closes. The logistics giant has been in turnaround mode, with its stock experiencing a significant boost in late June after fiscal Q4 earnings and revenue exceeded expectations. Adjusted profit increased 10% year-over-year to $5.41 per share, while revenue edged up 1% to $22.1 billion. For the August-ended quarter, analysts expect a 7% increase in profit to $4.86 per share, with revenue up 1% to $21.9 billion.

In April, FedEx announced a major cost-cutting initiative aimed at saving $4 billion by the end of fiscal 2025, with an additional $2 billion in savings from consolidating its air and ground services businesses. CEO Raj Subramaniam confirmed that the company is on track to meet these targets. However, the loss of its U.S. Postal Service contract to United Parcel Service (UPS) is expected to impact fiscal 2025 earnings by $500 million.

Lennar Earnings Preview

Homebuilder $Lennar Corp (LEN.US)$ will also report its earnings on Thursday. The stock has demonstrated resilience, holding near highs with a bullish relative strength line. Lennar's last earnings report in June saw a sharp decline after earnings and revenue decelerated from the previous quarter, though results remained strong with a 17% increase in earnings and a 9% rise in revenue to $8.8 billion. New orders surged 19%, while deliveries rose 15%.

For the August-ended quarter, the FactSet consensus anticipates a 6% decline in adjusted profit to $3.64 per share, with revenue expected to rise 5% to $9.1 billion. Despite concerns about a potential economic slowdown, homebuilders like Lennar have benefited from falling interest rates and the Fed's expected rate cuts.

The Federal Open Market Committee (FOMC) meeting is the week's most anticipated event. A 25-basis-point rate cut is widely expected and has been priced into the market for months. The focus will be on whether the Fed hints at another 50-basis-point cut in November. Recent data, including a slight uptick in core CPI and lower unemployment, suggest the Fed may adopt a cautious approach.

In addition to the Fed, next week will see significant central bank meetings globally. The Bank of Japan may surprise markets with an interest rate hike, reflecting a more hawkish stance, while the Bank of England is expected to hold rates steady. A soft set of inflation figures could, however, bring forward bets of a November rate cut.

As the stock market braces for another potentially volatile week, all eyes are on the Fed's policy decisions and key earnings reports from industry leaders like FedEx and Lennar. Investors will be keenly watching for any signals that could influence market direction in the coming months.