For equity markets, perhaps nothing is more important right now than a possible breakthrough in the US-China trade dispute, ideally in the coming week. The escalating spat involving tariffs and counter-tariffs that now weighs on half of all trade between the world’s two largest economies has kept stocks under pressure in 2018 and created uncertainties for 2019.
Market darlings, such as Apple (NASDAQ:AAPL) and the nation’s top retailers, including Walmart (NYSE:WMT) would all benefit from any positive outcome. After US President Donald Trump’s meeting with the Chinese President Xi Jinping on the sidelines of the Group of 20 summit in Buenos Aires this weekend, the two countries have agreed to relaunch negotiations, with the US postponing plans to increase tariffs on $200B worth of Chinese goods; in return China has said it will increase purchases of US agricultural, energy and other products while providing easier access to Chinese markets for US companies.
In addition to these macro developments in the coming week, the following three stocks will also come under investor scrutiny due to the company-specific news.
Supermarket behemoth, Kroger (NYSE:NYSE:KR) will report third quarter earnings on Thursday, December 6 before the market opens.
Analysts are expecting $0.43 a share earnings for the period ended October 31, a penny short of the profit the company reported a year ago. Sales are expected to remain almost flat at $27.69 billion, according to analysts’ average estimate.
KR Weekly 2015-2018
The company’s stock has risen 8% this year amid strong consumer spending and on hopes that the company is on track to turn around its business. It faces a formidable competitor, Amazon (NASDAQ:AMZN), ever since the online giant entered the grocery business after its purchase of Whole Foods in 2017.
To defend its turf, the largest US supermarket chain acquired Home Chef, a meal kit company, expanded its partnership with Instacart, a San Francisco-based, same-day grocery delivery service in some areas, to offer expedited delivery in more locales and announced a partnership with Ocado Group PLC (LON:OCDO), the innovative British grocery e-commerce company.
In the upcoming report, investors will watch for signs indicating whether these moves are helping the grocer withstand the torrent of change in the grocery business.
Broadcom (NASDAQ:AVGO), the last big chipmaker to report during the current earnings season, is also scheduled to release Q4 earnings on Thursday, December 6, after the market close. This report occurs after a fairly dismal quarter for the industry, which is seeing demand weakness that’s crushing the share prices of the big players.
Broadcom shares have been under selling pressure since it announced in early July that it planned to buy New York-based software producer CA (NASDAQ:CA) for about $19 billion in cash. Investors didn’t like the deal, sending Broadcom’s stock lower by 12% since then.
According to some analysts, the purchase of CA—which makes software for large, mainframe computers—doesn’t make sense and appears not to afford any synergies for Broadcom. During its upcoming earnings call, Broadcom management might, once more, try to convince investors of the potential inherent in the CA deal and its future growth potential.
On average, analyst consensus for Broadcom is an expectation of $5.55 EPS on sales of $5.4 billion for the quarter.
Google (NASDAQ:GOOG) CEO Sundar Pichai is scheduled to testify before Congress on Wednesday, December 5, to defend the search giant’s data collection and filtering practices. Pichai will appear before a committee of the US House of Representatives, where he will likely face questions from Republicans on whether the company harbors bias toward conservative users.
“The hearing will examine potential bias and the need for greater transparency regarding the filtering practices of tech giant Google,” the House Judiciary Committee said in a press release.
GOOG Weekly 2015-2018
Shares of Alphabet Inc., Google’s parent, have lost 14% since they reached a record high of $1274 in July. One of the biggest threats that all the social media giants, including Google, are facing is the prospect of government regulation to curb political manipulation and protect customer data. Shares of Google will likely move in the aftermath of Pichai’s testimony.