- U.S. CPI inflation report, Powell Testimony, Start of Q2 Earnings Season in focus this week.
- Palantir is a buy with bullish technical chart setup.
- Delta Air Lines is a sell with underwhelming earnings, guidance on deck.
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U.S. stocks finished higher on Friday to notch another winning week as the S&P 500and Nasdaq Composite both ended at new records after the latest jobs report boosted hopes of an autumn interest rate cut from the Federal Reserve.
For the week, the benchmark S&P 500 and tech-heavy Nasdaq rose 2% and 3.5% respectively, while the blue-chip Dow Jones Industrial Average added 0.7%.
Source: Investing.com
The week ahead will feature key Congressional testimony from Fed Chairman Jerome Powell as investors look for more clues on the outlook for the economy, inflation, and interest rates.
Traders are currently pricing in a roughly 78% chance the central bank will lower rates by 25 basis points at its September meeting, according to the Investing.com Fed Monitor Tool.
Meanwhile, on the economic calendar, most important will be Thursday’s U.S. consumer price inflation report for June, which is forecast to show annual CPI rising 3.1%, slowing from the 3.3% increase recorded in May.
The CPI data will be accompanied by the release of the latest figures on producer prices, which will help fill out the inflation picture.
Source: Investing.com
Elsewhere, a new earnings season is set to get underway with a slew of big bank earnings reports. Major lenders JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), and Citigroup (NYSE:C) are all due to deliver quarterly results on Friday.
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, July 8 - Friday, July 12.
Stock to Buy: Palantir
I expect Palantir (NYSE:PLTR) to continue its upward trend as shares of the application software company look primed for a significant breakout this week due to its bullish technical chart setup.
As seen below, the stock's technical chart shows a bullish correction that positions PLTR for a big move above $30.
Source: Investing.com
Currently trading at $27.23, just below its 2024 peak of $27.50 reached on March 7, PLTR is readying for a breakout from a substantial base that formed from late 2021 into early 2024. This big base remains firmly in place above $22, indicating strong support and an upside potential to pattern counts at $27.50-$29.30 and $30.30-$33.50.
Shares are up 58.6% year-to-date amid excitement over the big-data firm’s leading role in artificial intelligence. At current levels, the Denver, Colorado-based software maker has a market cap of $60.6 billion.
Palantir has been at the forefront of AI innovation, leveraging its cutting-edge data analytics platforms, Palantir Foundry and Palantir Gotham. With growing enterprise demand for AI-driven data analytics, Palantir is well-positioned to capitalize on this trend.
Additionally, investors should also note that Palantir is set to report its Q2 earnings in early August. Given the company's recent performance and upbeat growth trajectory, this earnings report could serve as another positive catalyst for the stock.
Source: InvestingPro
Analysts have become increasingly bullish on the data-mining specialist ahead of the print, according to an InvestingPro survey, which revealed that six out of the eight analysts surveyed boosted their earnings forecast to reflect a gain of roughly 34% from their initial estimates.
Palantir is seen earning $0.08 a share, improving 60% from a profit of $0.05 in the same quarter a year earlier. Meanwhile, revenue is forecast to jump 22.4% to $652.5 million, benefiting from strong demand for its data analytics tools and services from both government and commercial clients.
Stock to Sell: Delta Air Lines
On the flip side, Delta Air Lines (NYSE:DAL) is a stock to avoid this week. Delta is forecast to release its Q2 update before the U.S. market opens on Thursday at 6:30AM ET. Unfortunately, the outlook isn't promising.
The airline industry is facing significant headwinds amid concerns over weakening demand for air travel. Soft consumer spending, driven by a challenging economic environment, has put pressure on Delta’s revenue and profitability. This trend is likely to be reflected in Delta’s Q2 earnings and guidance, making the stock a risky bet.
According to the options market, traders are pricing in a swing of about 6% in either direction for DAL stock following the print.
Source: InvestingPro
Wall Street sees the Atlanta, Georgia-based airliner earning $2.37 a share in the June quarter, declining 11.6% from EPS of $2.68 in the year-ago period, due to higher cost pressures and declining operating margins.
Despite seeing 10 of the 15 analysts surveyed by InvestingPro upwardly revise their profit forecast ahead of the report, estimates are still lower than they were previously, reflecting the difficult operating environment.
Meanwhile, the legacy air carrier’s revenue is forecast to inch up 7.7% annually to $15.73 billion.
Looking ahead, it is my belief that Delta CEO Ed Bastian will provide a disappointing outlook for fiscal 2025 and strike a cautious tone amid growing recession fears that have sparked concerns about consumer spending.
DAL stock ended at $46.02 on Friday, its lowest closing price since April 4. Shares are down nearly 15% since climbing to a 2024 peak of $53.86 on May 13.
Source: Investing.com
At current valuations, Delta has a market cap of $29.7 billion, making it the most valuable U.S. airline company, ahead of industry peers such as Southwest Airlines (NYSE:LUV), United Airlines, and American Airlines (NASDAQ:AAL).
It should be noted that Delta’s short-term outlook for profitability and cash flow appears risky, as per InvestingPro, which flag rising fuel prices, and increasing aircraft maintenance costs as causes for concern.
Be sure to check out InvestingPro to stay in sync with the market trend and what it means for your trading.
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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 (SPY (NYSE:SPY)), and the Invesco QQQ Trust ETF (NASDAQ:QQQ). 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.