Inflation and interest rates will likely once again dominate the market trading agenda in the upcoming week after US government data last Friday showed there was no let-up in price pressures to the economy during the month of May.
US inflation accelerated to a fresh 40-year high last month, a sign that these price pressures are becoming entrenched in the economy, pushing the Federal Reserve to extend an aggressive series of interest-rate hikes.
The Fed is widely expected to raise the fed funds rate by a half point Wednesday and again next month, but this past Friday’s very hot consumer inflation report fueled speculation that policymakers may make a case for a bigger hike.
Stocks reacted negatively after the CPI release with the S&P 500 falling 5.1% for the week. Amid renewed concerns about inflation and the path of US monetary policy, below are three stocks we’re monitoring closely in the week ahead:
Electric vehicle manufacturer Tesla (NASDAQ:TSLA) plans to seek approval for its 3-for-1 stock split plan from shareholders, which is scheduled to occur at its August annual shareholders’ meeting. The EV automaker would thus become the latest tech giant to make such a move as a way of broadening its investment appeal.
TSLA Weekly TTM
The proposed split comes amid a sharp selloff in Tesla, which saw its shares underperform broad markets. The stock is down nearly 35% this year, compared with an 18% drop for the S&P 500. Tesla stock closed on Friday at $696.69.
If approved, this will be Tesla’s second split in less than two years. The company executed a five-for-one stock split in 2020, leading to a 60% surge in the share price from the day of the announcement to the execution date.
Last Monday, Amazon (NASDAQ:AMZN) stock started trading after a 20-for-1 split. Since 1980, S&P 500 companies that have announced stock splits have significantly outperformed the index three-, six-, and 12 months after the initial announcement, according to Bank of America research carried out by CNBC.com. According to the bank, stocks that have split climbed 25% on average over the next 12 months, versus 9% gains for the S&P 500.
Software and infrastructure giant Oracle (NYSE:ORCL) will release its fiscal 2022, fourth-quarter earnings report on Monday, June 13, after the market close. Analysts are projecting $1.37 a share profit on sales of $11.62 billion.
ORCL Weekly TTM
In March, the Austin, Texas-based Oracle gave an upbeat forecast for its cloud-computing business, helped by higher sales from its cloud division that could finish the fiscal year with the growth rate in the mid-20s. Total revenue in the past quarter was expected to gain as much as 5%.
Oracle has been trying to fuel growth in its cloud business and create a bigger imprint in the fast-growing market, which is led by Amazon, Microsoft (NASDAQ:MSFT) and Alphabet’s (NASDAQ:GOOGL) Google. Cloud revenue rose 24% to $2.8 billion in the fiscal third quarter, which ended Feb. 28.
Oracle shares, which closed on Friday at $67.14, have slumped by 23% this year amid a widespread sell-off in tech stocks.
3. Adobe Systems
Adobe Systems (NASDAQ:ADBE) will release its fiscal 2022, second-quarter earnings on Thursday, June 16 after the market close. The maker of Photoshop and other software and infrastructure products is expected to report $3.31 a share profit on sales of $4.35 billion.
ADBE Weekly TTM
San Jose, California-based Adobe, which competes with Salesforce.com (NYSE:CRM) in the marketing and e-commerce technology segment, is trying to boost growth by expanding its business offerings while strengthening its core creative software business.
In March, Adobe provided a disappointing outlook for the past quarter, suggesting increased competition is making a dent against the company’s prominent design software.
Adobe is in the midst of revising prices for its signature creative suite, the first major overhaul since 2017, according to Chief Executive Officer Shantanu Narayen. The new structure will reflect features Adobe has added in the past five years. The impact is expected to be seen in revenue in the second half of the fiscal year.
Adobe shares, which closed on Friday at $393.84, have fallen about 30% this year.