🟫 What to expect this week

and stocks near highs

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Michael Wight, Jason Phillips & Ryan Mendenhall
August 26, 2024

Good morning investors! The earnings season is still going on and we’re now waiting to hear from Nvidia.

Today we cover:

  • What to look forward to this week

  • Stocks hitting 52-week highs

  • Avoid private student loans

📊 Economy and News 

What to look forward to this week

Here’s what you need to keep an eye on this week:

Nvidia Results

Investor excitement around artificial intelligence faces a key test when Nvidia releases its earnings after Wednesday's close. This report, along with future guidance on AI investments, could significantly influence market sentiment, especially as we enter a typically volatile period.

Nvidia is also our Investment of the Week, as covered in this week’s Pro issue.

Here’s an excerpt from the Pro:

Nvidia has consistently outperformed expectations, surpassing revenue estimates for seven consecutive quarters and nine out of the last ten. The company has also beaten earnings per share (EPS) estimates in the last six quarters and in eight of the last ten.

Many strategists are recommending Nvidia as a strong buy before its earnings release. Jay Woods, Chief Global Strategist at Freedom Capital Markets, highlighted Nvidia as the stock to watch, noting that the $140 level could be a crucial metric ahead of earnings, though he doesn’t expect the stock to reach this level before Wednesday.

Don’t forget to upgrade to Pro to know more about what we said and read our latest report on American Express.

U.S. Data

The main economic focus this week is Friday’s Personal Consumption Expenditures (PCE) price index, the Fed’s preferred measure of inflation. During the Jackson Hole symposium, Fed Chair Jerome Powell acknowledged recent progress in inflation and hinted at an upcoming rate cut, the first in over four years. Other key data includes Monday’s durable goods orders, Thursday’s revised Q2 GDP figures, and the weekly jobless claims report.

Inflation Report

August's Eurozone inflation data, due Friday, will be crucial in shaping the European Central Bank's September interest rate decision. Following a slight but unexpected inflation rise in July, any surprises could affect expectations for an ECB rate cut, currently anticipated at 25 basis points on September 12.

Wednesday's inflation report from Australia could show headline inflation returning to the Reserve Bank of Australia’s 2-3% target range for the first time in three years. If inflation pressures ease, scrutiny may increase on the RBA, which has been hesitant to cut rates compared to other global central banks.

Moreover, investors also await Tokyo’s August inflation data on Friday, which could offer insights into Japan’s monetary policy.

Gold

Gold has reached consecutive record highs since 2022 and is up over 20% this year, with $3,000 an ounce now in sight. The metal has benefitted from global instability, inflation, and expectations of U.S. interest rate cuts. However, gold investors should remain cautious, as markets often correct after significant rallies.

Global hits:

Worth looking at: Markets are now wondering whether the Fed might cut by half a point in September.

📈 Stocks

S&P 500 5,634.61 (+1.15%)
DJIA 41,175.08 (+1.14%)
NASDAQ 17,877.79 (+1.47%)
BRENT CRUDE 79.13 (+2.33%)
* Prices as of Aug 26th, 12:20 AM UTC

These major names are near 52-week highs

Stocks have been doing well and some big names are rewriting history, hitting new highs. Here are some major names that are very close to the 52-week high:

Netflix: Netflix recently hit a 52-week high of $711.33 but is now trending at around $686. The stock very close to its average price target of $697.29 but some expect it will get a raise soon.

Meta: Trending at $528, Meta has a 52-week high of $544. The stock had a major fall in April 2024 but has recovered since and has an average price target of $568.

PayPal: PayPal had a very bad time in 2021 when it was trending over $300. The stock fell massively under $100 and has been recovering since. It has a 52-week high of $73.25, which is far from its all time high but experts don't see it reaching $300 anytime soon.

eBay: eBay is trending at $58.88, very close to its 52-week high of $59.35. Moreover, it is higher than the average price target of $57.95.

Barclay’s: Currently trading at $233, Barclay's has a 52-week high of $241.80. Some think it will go higher as the stock has a median target of $270.

Interesting: Canadian government forces rail lockout to end.

Good to know: Intel has hired Morgan Stanley, other advisers for activist defense.

Surprise: Boeing Starliner returning empty as NASA turns to SpaceX to bring astronauts back from ISS.

💵 Personal Finance

Why private student loans may not be suitable for you

Consider private loans only if you have already maxed out your federal aid. Most students can borrow up to $12,500 in an academic year, which may not be enough to fund their education.

Federal student loans are not only affordable but offer other benefits as well, including attractive forgiveness programs and the ability to pause interest. Sadly, private loans do not come with these features.

Failing to pay a private loan can be risky as it gives lenders the right to sue for recovery through wage garnishment and asset seizure. Also, it’s not only for the borrower but also for the cosigner, making private loans very risky.

Furthermore, you need to look at the interest rate. Consider going for a loan that comes with a fixed rate even if the variable rate looks more attractive as we are in a rising-rate environment and the rate may end up going higher than you expect. Most private lenders offer a rate between 4% and 15%, usually higher than the 5.5% charged by federal agencies.

Consider watching this video to know more about how student loans can impact lives:

How much to borrow?

This question can be hard to answer; however, most experts believe that you should not borrow more than your expected starting income after school.

💰 Be a Better Investor

“Investing is not about beating others at their game. It’s about controlling yourself at your own game.”

Benjamin Graham

Resources:

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👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.