U.S. stocks closed higher on Friday after a robust U.S. jobs report marked an unexpected rise in March hiring despite a slowdown in wage growth.
The week, however, witnessed a negative trend with all three indexes ending lower. The benchmark index dipped by 1% while the tech-heavy Nasdaq dropped by 0.8%.
The blue-chip Dow Jones Industrial Average recorded a significant decline of 2.3%, resulting in its worst weekly performance since 2024.
Source: Investing.com
The upcoming week holds promise for market enthusiasts as they seek further insights into potential rate cuts and economic indicators.
Economic Indicators to Watch
Key events include Wednesday’s release of the U.S. consumer price inflation report for March, expected to show a 3.4% annual increase in CPI compared to February’s 3.2% rise.
Notably, alongside the CPI data, figures on producer prices will be unveiled, providing a comprehensive view of the inflation landscape.
Moreover, the Federal Reserve’s minutes from its March FOMC policy meeting, slated for Wednesday, will be under close scrutiny.
As of Sunday, there is a 53% market prediction for a Fed rate cut in June, representing a significant decline from the prior 90% projection.
In addition, the Q1 earnings season commences with JPMorgan Chase, Wells Fargo, Citigroup, and BlackRock releasing their quarterly results on Friday.
For the week ahead, I provide insights on one stock expected to shine and another poised for downside movements specifically for Monday, April 8 to Friday, April 12.
Stock Set to Soar: JPMorgan Chase
Anticipate a strong showing from JPMorgan Chase this week with a potential break to a record high amidst positive financial results. The banking giant is likely to exceed expectations supported by robust performance in key business segments.
JPMorgan is scheduled to unveil its Q1 earnings before the market opens on Friday at 6:55AM EST, heightening optimism among analysts and investors regarding the Jamie Dimon-led institution.
Expectations hint at a possible 3% shift in JPM stock post-earnings, following a 0.7% dip after the previous report in January.
Although some analysts revised profit and revenue estimates downward, forecasts remain substantially higher with consensus projecting an EPS of $4.13 for Q1, representing a 1% rise from the previous year.
Revenue is anticipated to surge by 8.9% year-over-year to $41.7 billion, reflecting the bank’s historical peak in quarterly sales buoyed by solid growth in the retail banking domain.
Foreseen outperformance in fixed income trading, equity trading, and investment banking revenues positions the bank favorably amid elevated trading activities.
CEO Jamie Dimon is expected to provide an optimistic future outlook, leveraging the bank’s strategic positioning amidst global deal-making, mergers, and IPO underwriting resurgence.
Ending Friday at $197.45, just below the $200.30 record close set in March, JPMorgan Chase boasts a market cap of $568.7 billion, securing its status as the world’s most valuable bank.
Registered on a significant uptrend since the start of 2024, JPMorgan has realized a 16% gain year-to-date, supported by economic improvements, high banking service demand, and favorable regulatory conditions.
Notably, JPMorgan sustains robust financial health, reinforced by compelling earnings and revenue growth prospects, an alluring valuation, and a strong balance sheet with 54 consecutive years of dividend payouts.
Stock on the Decline: Delta Air Lines
Prepare for a lackluster week ahead for Delta Air Lines as the airline’s Q1 performance and future guidance are anticipated to fall short of investor expectations due to a challenging operating environment.
Delta is slated to release its Q1 update prior to the U.S. market opening on Wednesday at 6:30AM ET amid growing geopolitical and economic uncertainties.
Market indicators suggest a potential 6% swing in DAL stock post-update, following a 9% drop post-Q4 earnings release in January.
Struggling with near-term challenges, three analysts out of seven have revised EPS estimates downwards due to a projected 58% decline from initial forecasts.
Analysts predict Delta to report $0.36 per share in the March quarter, marking a 44% jump from the prior year, alongside a 9.5% annual revenue increase to $12.9 billion.
However, focus remains on future guidance expectations rather than past results.
Amidst soft consumer spending and diminishing operating margins, a conservative fiscal 2024 outlook is expected from Delta’s management.
Apprehensions around Middle East tensions and escalating oil prices heighten concerns over profitability.
Closing at $46.06 on Friday, Delta’s 14.5% year-to-date upsurge peaked at $49.20 on April 1, marking its highest since July 13, 2023.
With a market cap of about $29 billion, Delta leads as the most valuable U.S. airline, surpassing competitors like Southwest Airlines, United Airlines, and American Airlines.
Short-term profitability and cash flow for Delta appear precarious, attributed to growing fuel costs and aircraft maintenance expenses, as highlighted by InvestingPro.
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Disclaimer: The author is currently long on S&P 500, SPDR S&P 500 ETF (SPY), Invesco QQQ Trust ETF (QQQ), and Technology Select Sector SPDR ETF based on a risk-assessed portfolio rebalancing approach.
Opinions expressed in this article solely reflect the author’s perspective and do not constitute investment advice.