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The calendar turns to September next week with the stock market reeling from a more hawkish Federal Reserve than some anticipated. Will the selling pressure continue as higher interest rates are priced in? Already in the mix, September has traditionally been the worst month for the S&P 500 Index, with an average loss since 1945 of 0.6%. Economic reports due in during the week include updates on consumer confidence, construction spending, and vehicle sales, which all arrive before the big August jobs report drops at the very end of the week. The U.S. jobs report for August is expected to show 300K jobs adds for the month and an unemployment rate that holds steady at 3.5%. On the corporate calendar, earnings reports from Lululemon (LULU), HP Inc. (NYSE:HPQ), and Broadcom (NASDAQ:AVGO) are the headliners, while a strategy update from Bed Bath & Beyond (NASDAQ:BBBY) also has a good chance to be a share price mover. Another wildcard to watch is the developments in the European energy markets when Russia’s Gazprom stops gas flows through the Nord Stream pipeline for three days of maintenance. European nations have accused Russia of using gas as a weapon to fight back against Western sanctions over Ukraine.
Earnings spotlight: Monday, August 29 Pinduoduo (PDD) and Heico (NYSE:HEI).
Earnings spotlight: Tuesday, August 30 – Bank of Montreal (BMO), Baidu (BIDU), Crowdstrike (CRWD), HP (HPQ), Hewlett Packard Enterprise Company (HPQ), Ambarella (AMBA), Best Buy (NYSE:BBY), and Chewy (NYSE:CHWY).
Earnings spotlight: Wednesday, August 31 – Brown-Forman (BF.A), MongoDB (MDB), Okta (NASDAQ:OKTA), and Five Below (FIVE).
Earnings spotlight: Thursday, September 1 – Broadcom (AVGO), PagerDuty (NYSE:PD), Lululemon (LULU), and Campbell Soup (CPB).
IPO watch: Hempacco (NASDAQ:HPCO) is expected to start trading on August 30. The company sells hemp-based smokable products to consumers in the United States. Hempacco said it plans on offering 3M shares priced between $4 and $6 per share, which would raise $15M if priced at the midpoint.
To the Moon: NASA plans to return to the moon next week for a 42-day test flight as a new era in space exploration opens up. The space agency’s uncrewed Artemis I could launch during a two-hour launch window scheduled for August 29 from 8:33 a.m. ET to 10:33 a.m. There are backup launch windows on September 2 and September 5. A key mission goal is to make sure the capsule’s heat shield can protect returning astronauts from the intense heat of re-entry on a future flight. The ultimate goal for the Artemis program is to send missions to beyond the moon into deep space. What follows Artemis I? NASA aims for a crewed SLS-Orion mission around the moon with Artemis II as early as 2024 to be followed a year or more later by an Artemis III trip to the lunar surface, with SpaceX (SPACE) providing the lift. There are plenty of stocks which could be impacted by how the moonshots go. Lockheed Martin (NYSE:LMT) is the prime contractor on the Orion spacecraft, while NASA’s prime contractors for the rocket launch system include Aerojet Rocketdyne (NYSE:AJRD), Boeing (NYSE:BA), and Northrop Grumman (NOC). Redwire’s (RDW) critical sun sensor components and advanced optical imaging technologies will be launching on NASA’s Orion spacecraft as a part of the space agency’s Artemis I mission. Aeva Technologies (NYSE:AEVA) is also in the mix with a LiDAR-based mobile terrain-mapping and navigation system designed to support the next generation of lunar and planetary exploration, while KULR Technology Group (NYSE:KULR) has a battery safety contract with NASA to test its lithium-ion cells going into battery packs designed for the Artemis Program. Raytheon Technologies'(RTX) unit Collins Aerospace & Axiom Space (OTCQB:AXIM) was selected to advance spacewalking capabilities in low-Earth orbit and at the Moon. Lunar vehicles need tires, which Goodyear Tire & Rubber (GT) is being contracted to develop. Rocket Lab (RKLB) has been used to test new orbits around the moon, while Canoo (GOEV) vehicles are planned to be used to shuttle astronauts to the launchpad. Sidus Space (NASDAQ:SIDU) is a sub-contractor for extravehicular activity services. On the communications side, Lockheed Martin (LMT), Amazon (AMZN), and Cisco (CSCO) have teamed up to develop new voice, AI and tablet-based video technologies for use around the moon and back. The list of companies with an interest in the moon is expected to grow rapidly after scientific experiments begin on the surface.
Lululemon earnings preview: Lululemon (LULU) will report earnings on September 1 with analysts expecting revenue of $1.77B and EPS of $1.85 to be reported. UBS thinks Lululemon’s print will reinforce the market’s confidence in the long-term outlook and ability to take market share in a weak macro environment. “We believe the market is increasingly looking for Softlines stocks which are less cyclical, yet is having a hard time finding them since Off-Price stocks have not been behaving as defensively as expected,” previewed the analyst team. The bull thesis is that a strong quarter likely incrementally convinces investors to buy LULU at a high multiple since they will believe increased conviction in LULU’s ability to deliver growth justifies paying a high price. CFRA warned that LULU uses air freight to receive most of its inventory which is expected to remain elevated until at least the second half of FY23. A wildcard with Lululemon identified by CFRA is how quickly the Mirror acquisition can pay dividends.
Eyes on movies: Theater stocks could create buzz again next week with AMC Entertainment (NYSE:AMC) and its new preferred class trading APE (APE) both buzzing again in social media circles. The recent disruption in the sector includes Cineworld (OTCPK:CNNWF) filing for Chapter 11 bankruptcy protection and MoviePass returning from the dead with a beta version launch set for Labor Day. MoviePass parent Helios and Matheson ceased operations after filing for Chapter 7 bankruptcy in 2020. The U.S. box office has generated $5.18B this year through August 26. That tally is up 162% from a year ago and 186% from 2020. but still about 32% below the box office pace in 2019.
Corporate events: VMWare (VMW) will hold a three-day global multi-cloud event called VMware Explore 2022 at the beginning of the week. The event will feature a variety of sessions spanning key technology themes and industries, as well keynote addresses by top execs. AMD (AMD) will hold a livestream premiere on August 29 to unveil next generation AMD PC products. CEO Dr. Lisa Su and other top AMD executives will present details on the latest “Zen 4” architecture that powers upcoming AMD Ryzen processors and the all new AM5 platform built around the latest technologies including DDR5 and PCIe5. Allstate Corporation (ALL) will host a conference call on August 31 focusing on its investments strategy and operational topics. On September 1, RemeGenix (RGX) will report encore data from its first human study of RGX-111 for Mucopolysaccharidosis. Shares of RemeGenix have been volatile in the past after RGX-111 updates. Read about more events that could lead to share price moves in Seeking Alpha’s Catalyst Watch.
Notable conferences: The conference schedule is headlined Jefferies 2022 Semiconductor Conference with appearances by Himax Technologies (HIMX), AMD (AMD), and Adtran Holdings (ADTN) standing out. Other conferences of note include the Credit Suisse 10th China Internet Conference and Deutsche Bank Technology Conference.
Barron’s mentions: The cover story this week delves into how the scarcity of fresh water is rapidly emerging as a global economic threat that could disrupt businesses and jeopardize growth. Drought, climate change, population growth, and a focus on environment, social, and corporate governance investing have all increased the focus on water and the role it could play in portfolios. The size of the global water business is estimated at about $655B a year spread across subsectors such as water treatment, valves, pumps, filtration, desalinization, and metering. With companies, regulators, and investors starting to react to the water supply issues, the publication calls out six water stocks that could take off. The recommendation is to watch for upside with American Water Works (NYSE:AWK), Danaher (NYSE:DHR), Essential Utilities (NYSE:WTRG), Evoqua (NYSE:AQUA), Mueller Water Products (NYSE:MWA), and Xylem (NYSE:XYL).
Sources: EDGAR, Bloomberg, CNBC, Reuters
Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.
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