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Inflation talk will be front and center again with investors next week after a key price gauge watched by the Federal Reserve jumped to its highest 12-month gain in more than 40 years. Fed speakers will roll off the pre-FOMC blackout period to digest that development and other economic reports with speeches scheduled for Federal Reserve Bank presidents Charles Evans, James Bullard, and Loretta Mester. The consensus is that more rate moves will be needed to combat inflation, but there is a difference of opinion on the trajectory with eyes on the next FOMC meeting. Federal Reserve Chairman Jerome Powell has said that the September rate decision will depend on economic data, which will include the July jobs reports that hits on August 5. Meanwhile, the earnings calendar is heavy again next week with 148 S&P 500 companies reporting earnings. Companies stepping into the earnings confessional include BP (BP), Airbnb (NASDAQ:ABNB), CVS Health (CVS), Starbucks (NASDAQ:SBUX), Caterpillar (NYSE:CAT), and Block (SQ). Also of high interest, Tesla (TSLA) holds its shareholder meeting next week at a crucial time for the electric vehicle maker and the start of the trial around the Department of Justice's bid to block UnitedHealth's (NYSE:UNH) deal with Change Healthcare (CHNG) could have big implications in healthcare.
Earnings spotlight: Monday, August 1 Builders FirstSource (BLDR), Avis Budget (CAR), Activision Blizzard (ATVI), Pinterest (PINS), and Simon Properties (SPG).
Earnings spotlight: Tuesday, August 2 - BP (BP), Marathon Petroleum (MPC), Caterpillar (CAT), JetBlue Airways (JBLU), Uber (UBER), Starbucks (SBUX), PayPal (PYPL), AMD (AMD), Gilead Sciences (GILD), and Airbnb (ABNB).
Earnings spotlight: Wednesday, August 3 - CVS Health (CVS), Yum Brands (YUM), AmerisourceBergen (ABC), McKesson (MCK), Energy Transfer (ET), MGM Resorts (MGM), and eBay (EBAY).
Earnings spotlight: Thursday, August 4 - Alibaba (BABA), Cigna (CI), ConocoPhillips (COP), Paramount Global (PARA), Eli Lilly (NYSE:LLY), Warner Bros. Discovery (WBD), Amgen (AMGN), and Block (SQ).
Earnings spotlight: Friday, August 5 - Goodyear Tire & Rubber (GT), Western Digital (WDC), AMC Networks (AMCX), DraftKings (DKNG) and Telus (TU).
IPO watch: No new IPOs are expected to debut next week. A block of shares of Arcellx (ACLX) and Nuvectis Pharma (NASDAQ:NVCT) will roll off their IPO lockup period. Loop Media (NYSE:LPTV) is slated to price a $12M follow-on offering.
Starbucks earnings preview: Starbucks (SBUX) will report earnings on August 2 to expectations for Q2 revenue of $8.1B and EPS of $9.76. The coffee chain's update on store closings, a growing unionization push, and read on consumer demand at the higher price points are all seen as key points that could have ripple effects across the consumer sector. Evercore ISI is positive ahead of the report on the view that a faster-than-anticipated rebound in China during the quarter will support guidance for the back half. The firm also thinks the chain wields some pricing power that will help boost the bottom line. "We believe that there remains a significant transaction growth opportunity for Starbucks," previewed analyst David Palmer ahead of the report. Palmer and team envision more significant improvement in transaction trends occurring in FY23 as the company makes changes to the bar configuration and technology to bolster production capacity.
Caterpillar earnings preview: Caterpillar (CAT) steps into the earnings confessional on August 2 with shares outperforming the S&P 500 Index year-to-date despite concerns of the impact of an economic downturn. JPMorgan warns that CAT could miss estimates due to weakness with enterprise sales in China and FX pressure in several markets. However, the firm kept a bullish view on CAT with potential sources of revenue upside including dealer restocking and a stronger recovery in China. Also working in the construction equipment giant's favor, raw material prices have come down, which JPMorgan thinks will benefit CAT's profitability beginning in early 2023 given roughly two quarters' lag for flow-through. Income investors will have their eyes on the dividend payout, which currently gives new buyers a yield of 2.41%.
Eyes on oil: The OPEC+ group is expected to decide at a meeting next week whether oil production targets will be held at their current level or if a small output hike will be approved. The latest reporting suggests that support for a modest increase for September output is not widespread. OPEC's Joint Technical Committee meeting will be held on August 2, with the Joint Ministerial Monitoring Committee meeting scheduled for August 3. The full OPEC+ Ministerial meeting will follow immediately after the JMMC meeting. The energy market will also be on high alert when Russian President Vladimir Putin meets with Turkish President Recep Tayyip Erdogan in Sochi, Russia later in the week.
Jobs report: Economists forecast the U.S. economy added 250K jobs in July and the unemployment rate held steady at 3.6%. Bank of America says there are growing signs that labor market momentum is cooling from a pretty elevated level, although labor demand still remains robust based on job openings data from Indeed. The firm expects average hourly earnings to increase by 0.4% in July from June and be up 5.0% from a year ago.
Data reads: Watch for updates on monthly deliveries from Chinese automaker Li Auto (LI), Nio (NIO), and XPeng (XPEV) as the calendar rolls to August. In the casino sector, the Macau gross gaming revenue report for August is also due out with another disappointing tally expected to be released for the local properties for Las Vegas Sands (LVS), Wynn Resorts (WYNN), and MGM Resorts (MGM).
Corporate events: ATRenew (NYSE:RERE) will hold its 2022 Investor Day on August 2. Notable conferences on tap for the week ahead include the KBW Keefe, Bruyette & Woods Community Bank Investor Conference, Susquehanna's Get Carded: Payments and FinTech Conference and the Alzheimer's Association International Conference. Cognition Therapeutics (NASDAQ:CGTX), Vaccinex (VCNX), Acumen Pharmaceuticals (NASDAQ:ABOS), and Eisai Co. (ESALY) are some of the companies presenting drug data at the Alzheimer's conference. Read more about the events next week that could impact shares prices in Seeking Alpha's Catalyst Watch.
Box office preview: Warner Bros. Discovery (WBD) DC League of Super-Pets is expected to top the box office over the weekend with a haul of $25M to $30M across the 4,300 theaters the animated superhero film is opening in. Universal Pictures' Nope is expected to take second place after a solid $44.4M opening weekend for parent Comcast (CMCSA). AMC Entertainment (AMC) and Cinemark (CNK) will also report earnings next week with consensus EPS marks in a slight downtrend over the last three weeks, despite the big boom in movie theater revenue this year.
Barron's mentions: The cover story tackles the potential for droughts in the Midwest and eastern Africa to combine with the war in Ukraine to threaten the global food supply. The UN’s Food Price Index for a basket of commodities is observed to have hit records this year and food prices in the U.S. are up just over 10% from a year ago. If there is an answer to the crisis, it may be through technology. Companies using new technology to make food production more efficient include Deere (DE), Corteva (CTVA), CNH Industrial (CNHI), and ICL Group (NYSE:ICL). The utilities sector also gets a hard look this week amid the market turmoil. AES Corp. (AES), Edison International (EIX), Entergy (ETR), Exelon (EXC), Fluence Energy (FLNC), and NextEra Energy (NEE) are singled out as attractive picks.
Sources: EDGAR, Bloomberg, CNBC, Reuters, The Hollywood Reporter
Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.
