• Fed charge minimize, FOMC dot-plot, Powell feedback will likely be in focus this week.
• Micron affords important upside potential backed by sturdy earnings development and powerful demand for its AI-related merchandise.
• Nike faces mounting challenges, with declining revenues, a cautious outlook, and mushy client demand suggesting additional draw back for its inventory value.
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U.S. shares closed largely decrease on Friday, with the posting its longest run of losses since 2020, as buyers priced in the potential of the Federal Reserve chopping charges extra slowly subsequent 12 months.
For the week, the blue-chip Dow fell 1.8%, the dipped about 0.6%, whereas the tech-heavy tacked on round 0.3% to safe its fourth consecutive week of beneficial properties.
Supply: Investing.com
The blockbuster week forward is anticipated to be a busy one crammed with a number of market-moving occasions, together with the Fed’s closing financial coverage assembly of 2024. An official assertion is due at 2:00PM ET on Wednesday. Fed chair Jerome Powell will converse at 2:30PM ET.
With a 25-basis level charge minimize assured, buyers will deal with the central financial institution’s steerage on rates of interest amid indications Powell may sign a pause in coverage easing.
In the meantime, on the financial calendar, most vital will likely be Tuesday’s U.S. retail gross sales report, which can shed additional gentle on the well being of the financial system. The private consumption expenditures value index studying for November, due Friday, can even be intently watched.
Supply: Investing.com
Elsewhere, on the earnings docket, there are only a handful of company outcomes due, together with Nike (NYSE:), FedEx (NYSE:), Micron Expertise (NASDAQ:), Lennar (NYSE:), Basic Mills (NYSE:), and Carnival (NYSE:) as Wall Road’s reporting season attracts to an in depth.
No matter which path the market goes, beneath I spotlight one inventory prone to be in demand and one other which may see recent draw back. Bear in mind although, my timeframe is only for the week forward, Monday, December 16 – Friday, December 20.
Inventory to Purchase: Micron
Micron is poised for a strong week because the reminiscence chip maker gears as much as report its fiscal first-quarter outcomes on Wednesday at 4:05PM ET. A name with president and chief government officer Sanjay Mehrotra is about for five:00PM ET.
Market individuals anticipate a large swing in MU inventory after the replace drops, in line with the choices market, with a doable implied transfer of +/-11.7% in both path. Earnings have been catalysts for outsized swings in shares this 12 months, with MU surging practically 17% when the corporate final reported quarterly numbers in September.
Wall Road anticipates robust earnings pushed by sturdy demand for its Excessive-Bandwidth Reminiscence (HBM3E) chips, that are important for AI and cloud computing purposes.
Including to the bullish sentiment, 16 of the 24 analysts surveyed by InvestingPro have revised their earnings estimates upward over the previous three months. 
Supply: InvestingPro
Micron is seen incomes $1.77 a share, reversing a pointy year-ago lack of $0.95 per share, signaling a major restoration after a difficult interval within the reminiscence market. Income is forecast to soar 83.9% yearly to $8.70 billion, benefiting from gross sales of high-bandwidth reminiscence gadgets to knowledge facilities operating AI purposes.
The Boise, Idaho-based firm performs a essential function in powering developments in AI, cloud computing, and 5G connectivity with its progressive DRAM and NAND merchandise.
Wanting forward, I consider Micron’s administration will present strong steerage for the present quarter to replicate sturdy reminiscence demand from cloud suppliers as development prospects in synthetic intelligence stay robust. Micron’s groundbreaking HBM3E know-how, a key enabler for AI workloads, is anticipated to be a cornerstone of its development technique.
MU inventory ended Friday’s session at $102.50. At present ranges, Micron has a market valuation of $113.7 billion. Shares, which reached an all-time excessive of $157.54 on June 18, are up 20.1% within the year-to-date.
Supply: Investing.com
It needs to be famous that Micron inventory stays undervalued in line with the InvestingPro Truthful Worth mannequin and will see a rise of 8.5% to $111.22.
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Inventory to Promote: Nike
In distinction, Nike, the worldwide athletic attire big, faces important headwinds this week because it prepares to report fiscal second-quarter outcomes on Thursday at 4:15PM ET.
Regardless of its robust model recognition, the corporate is grappling with declining client demand for athletic put on and footwear, alongside provide chain challenges.
In accordance with the choices market, merchants are pricing in a swing of +/-7.7% in both path for NKE inventory following the print. Notably, shares gapped down after earnings previously 4 quarters, and continued challenges counsel additional draw back.
Analysts have slashed their revenue estimates amid weakening working margins and slowing development in North America and China, two of Nike’s largest markets.
Supply: InvestingPro
Nike is anticipated to submit a 37.8% drop in adjusted earnings per share to $0.64, with income projected to say no by 9.7% from the year-ago interval to $12.1 billion.
The sneaker big has confronted mounting challenges in current quarters, battling weakening demand for athletic footwear and attire amid a softening macroeconomic setting.
The main target will likely be on newly reappointed CEO Elliott Hill’s plans for a turnaround after the corporate pivoted to a direct-to-consumer mannequin, which has struggled to offset declining wholesale revenues.
NKE inventory – which fell to a 2024 low of $70.75 on August 5 – closed at $77.25 on Friday. At its present valuation, the Beaverton, Oregon-based sportswear retailer has a market cap of $115 billion. Shares are down 28.8% within the year-to-date. 
Supply: Investing.com
It needs to be famous that Nike has a beneath common InvestingPro ‘Monetary Well being’ rating of two.4 out of 5.0 as a consequence of ongoing issues over weakening gross revenue margins and spotty gross sales development.
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Disclosure: On the time of writing, I’m lengthy on the S&P 500, and the by way of the SPDR® S&P 500 ETF (SPY), and the Invesco QQQ Belief ETF (QQQ). I’m additionally lengthy on the Invesco High QQQ ETF (QBIG), Invesco S&P 500 Equal Weight ETF (RSP), and VanEck Vectors Semiconductor ETF (SMH).
I repeatedly rebalance my portfolio of particular person shares and ETFs primarily based on ongoing threat evaluation of each the macroeconomic setting and firms’ financials.
The views mentioned on this article are solely the opinion of the writer and shouldn’t be taken as funding recommendation.
Observe Jesse Cohen on X/Twitter @JesseCohenInv for extra inventory market evaluation and perception.
