Is it time to start panicking? Stocks ended much lower on Friday as investors begin to re-assess their risk tolerance after more data suggested a global economic slowdown could be imminent.
A weak jobs report seemingly caught investors off guard, pushing the Dow Jones Industrial Average lower for a fifth consecutive session — its longest losing streak since June. Wall Street was spooked by the Labor Department announcing the U.S. economy added just 20,000 new jobs in February, which was a major miss from the 178,000 jobs economists had forecasted.
The Dow, which at one point was down more than 200 points, ended Friday down 22.99 points, or 0.1%, to close at 25,450.24. The S&P 500 index is in the midst of its worst losing streak in four months, shedding 5.86 points, or 0.2%, to close at 2,743.07. The tech-heavy Nasdaq Composite Index, meanwhile, declined by 13.32 points, or 0.2%, to close at 7,408.14 — its weakest stretch in almost a year. On a weekly basis, the Nasdaq declined 2.5%, while both the Dow and the S&P 500 fell 2.2%.
Is this a buying opportunity? If you’re worried about the jobs report, you’re likely worrying too much, according to some economists. JJ Kinahan, chief market strategist at TD Ameritrade, advised investors not to read too much into it, noting that the recent volatility in the numbers may be related to the government shutdown. And despite the weak number, the unemployment rate still fell to 3.8% from 4%. Just as impressive, average hourly earnings rose by 11 cents per hour — the largest gain in a decade.
Not all stocks were punished, however. Shares of Costco (COST) rose more than 5% Friday after the warehouse membership retailer reported earnings Thursday that crushed Wall Street expectations and suggested consumers aren’t as concerned about spending as some initially believed. This remains a positive sign for the market as the earnings season comes to a close. Here are four stocks to keep an eye on for this coming week.
Stitch Fix (SFIX) – Reports after the close, Monday, Mar. 11
Wall Street expects Stitch Fix to earn 5 cents per share on revenue of $364.89 million. This compares to the year-ago quarter when earnings came to 2 cents per share on revenue of $295.91 million.
What to watch: Stitch Fix shares, which have been under pressure from competitive threats like Amazon (AMZN), have rebounded impressively, rising more than 30% in January alone. Since its 37.5% plunge in December, the stock is now up 50% year to date, besting the 9.5% rise in the S&P 500 index. To keep the stock in its upward trajectory, on Monday Stitch Fix CEO Katrina Lake, who has done a solid job growing the company’s active clients base, must convince a skeptical analysts community that the subscription fashion retailer can be profitable. Wall Street will also listen closely to what the company says about its plans to disrupt the traditional apparel industry as we know it.
Adobe (ADBE) – Reports after the close, Thursday, Mar. 14
Wall Street expects Adobe to earn $1.62 per share on revenue of $2.55 billion. This compares to the year-ago quarter when earnings came to $1.55 per share on revenue of $2.08 billion.
What to watch: Owing to net-new subscribers and the growing adoption of its enterprise services, expectations are high for Adobe’s Creative Cloud segment, which is approaching annualized revenue of $6 billion. The growth has been driven by better-than-expected subscription adoption among government and educational institutions. And with some 90% of the company’s total revenues being of the subscription-based variety Wall Street expect not only a top- and bottom-line beat Thursday, but also upside guidance.
DocuSign (DOCU) – Reports after the close, Thursday, Mar. 14
Wall Street expects the company to breakeven at 0 cents per share on revenue of $193.62 million. This compares to the previous quarter when earnings were 0 cents per share on revenue of $178.4 million.
What to watch: Investors who missed the buying opportunity when I last spoke about this company must now buying it at a more expensive price. After a 33% plunge at the end of November, the stock is now up 40% so far in 2019. And given the company’s projected growth rate, there is no sign of slowing down DocuSign, which provides individuals and businesses the ability to digitize an agreement process. One of the most successful IPOs of 2018, DocuSign on Thursday must continue to show not only a re-acceleration of the top line, but also outline its path towards profitability.
Broadcom (AVGO) – Reports after the close, Thursday, Mar. 14
Wall Street expects the company to earn $5.23 per share on revenue of $5.82 billion. This compares to the year-ago quarter when earnings came came to $5.12 per share on revenue of $5.33 billion.
What to watch: As with the rest of the chip sector, Broadcom shares have been under pressure, falling about 5% one the past thirty days. The company last July announced plans to acquire CA Technologies (CA) for $18.9 billion in cash, which raised concerns about its ability to synergize the deal. But given Broadcom’s strong track record of M&A integration, combined with its ample cash on the balance sheet, this could prove to be a win-win situation for investors. Nonetheless, the company on Thursday must convince a skeptical investor base that CA is worth the price.
