- Powell speech, core PCE inflation, Costco and Micron earnings in focus this week.
- Meta Platforms is a buy as it holds its annual ‘Meta Connect’ event, showcasing the company’s latest advancements in AI, and virtual reality (VR).
- Boeing is a sell as it continues to face serious challenges with ongoing labor disputes and financial strain.
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U.S. stocks ended modestly lower on Friday, but the major indexes closed the week with strong gains thanks to the Federal Reserve's upsized interest rate cut.
On Thursday, the blue-chip Dow Jones Industrial Average hit a record above 42,000, and the benchmark S&P 500 climbed above 5,700 for the first time.
For the week, the S&P 500 gained 1.4% while the tech-heavy Nasdaq Composite rallied 1.5%, and the Dow climbed 1.6% during the period.
Source: Investing.com
The week ahead is expected to be another busy one as investors continue to assess the Fed’s path for rate cuts. Markets are fully pricing in a cut of at least 25 basis points in November, with expectations for a cut of 50bps given a 45.7% chance, according to Investing.com’s Fed Monitor Tool.
Most important on the economic calendar will be Friday’s core PCE price index, which is the Fed's favorite inflation gauge. That will be accompanied by a heavy slate of Fed speakers, including Chairman Jerome Powell on Thursday morning.
Source: Investing.com
Elsewhere, the earnings schedule for next week includes reports from just a few noteworthy companies. These include Costco (NASDAQ:COST), Micron (NASDAQ:MU), KB Home (NYSE:KBH), and AutoZone (NYSE:AZO).
Regardless of which direction the market goes, below I highlight one stock likely to be in demand and another which could see fresh downside. Remember though, my timeframe is just for the week ahead, Monday, September 23 - Friday, September 27.
Stock to Buy: Meta Platforms
Meta Platforms (NASDAQ:META) stands out as a top buy this week, with its highly anticipated 'Meta Connect' event set to be a major catalyst for the stock.
META stock ended Friday’s session at a fresh all-time peak of $561.35, above the prior record high close of $559.10 from the day before. Shares have soared 58.6% in the year to date, rising alongside much of the tech sector.
Source: Investing.com
Meta is gearing up for its annual two-day ‘Connect’ conference on Wednesday and Thursday, a showcase focused on the company’s Reality Labs division.
CEO Mark Zuckerberg is set to deliver a keynote address on Wednesday at 1:00PM ET, where he is expected to share Meta’s vision for AI (artificial intelligence), VR (virtual reality), AR (augmented reality), and the metaverse, including Meta’s newest product announcements.
Zuckerberg’s hour-long presentation will be followed by a developer-focused address at 2:00PM ET, led by Meta CTO and Reality Labs chief Andrew Bosworth.
The most anticipated products expected to appear during the conference are the successor to Meta’s Quest 3 mixed-reality headset and perhaps updates to the Ray-Ban Meta smart glasses and AI-driven features.
Furthermore, the Facebook and Instagram parent company is expected to feature its newest Llama large language model, an AI chatbot assistant, and a generative AI image generator in apps like WhatsApp.
Meta shares tend to rally during the week of its annual ‘Connect’ event. The tech giant has a history of attracting several analyst upgrades in the wake of its conference presentations.
Source: InvestingPro
As InvestingPro points out, Meta boasts an above-average Financial Health Score of 4.0/5.0, supported by its robust earnings and revenue growth prospects, combined with its attractive valuation and pristine balance sheet.
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Stock to Sell: Boeing
In stark contrast, Boeing (NYSE:BA) faces a much tougher road this week, as an ongoing machinist strike threatens to weigh heavily on the company’s finances and production schedule.
BA stock closed at a fresh 52-week low of $153.29 on Friday, its weakest level since November 3, 2022. Shares are down a whopping 41.2% in 2024.
Source: Investing.com
Boeing continues to face serious challenges with ongoing labor disputes as more than 30,000 machinists went on strike on September 13 after rejecting a tentative contract in a nearly 95% vote.
This strike has already brought most of Boeing’s aircraft production to a grinding halt, costing the company an estimated $50 million a day, according to Bank of America (NYSE:BAC) estimates.
Boeing’s financial situation is already precarious, with the company burning through $8 billion so far this year due to production delays and other costly missteps. The current work stoppage could push Boeing’s financials further into disarray.
Ratings agencies have warned that Boeing could face a downgrade if the strike drags on, which would further add to the company’s already significant $60 billion debt burden.
With no immediate resolution in sight, Boeing’s profitability and cash flow will likely remain under pressure, especially as union negotiations show little progress.
Despite its downbeat year-to-date performance, it is worth mentioning that the company’s stock is vulnerable to further downside. InvestingPro’s AI-powered Fair Value models suggest 13.5% potential downside, pointing to a target price of $132.67.
Source: InvestingPro
Moreover, it should be noted that Boeing has a poor InvestingPro ‘Financial Health’ score of 1.0 out of 5.0 for the latest period due to concerns over its profitability outlook, and free cash flow levels.
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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF, and the Invesco QQQ Trust ETF. I am also long on the Technology Select Sector SPDR ETF (NYSE:XLK).
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies' financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.