US stock markets may experience another volatile week amid concerns that the Federal Reserve’s drive to tame inflation, which is running near a four-decade high, could derail the current economic recovery.
The Fed raised its benchmark rate by a half percentage point Wednesday, and signaled it could follow up with more increases of the same magnitude. Stock investors are also watching the bond market, where yields have been rising in anticipation of additional Fed interest rate hikes.
The 10-year Treasury yield pushed through 3% and remained there for the first time since late 2018 in the past week. On Friday, the yield was at 3.13%, up from 2.94% the week before. S&P 500 was down 0.2% for the week, posting its fifth straight weekly decline—the longest losing streak for the broad benchmark since June 2011. And the tech-heavy NASDAQ was off 1.5% for the week.
With investors focusing on broader economic risks, here's our list of three companies set to report their latest earnings during the week ahead, which could drive significant price action in their stocks as a result.
1. Peloton
Fitness bike maker Peloton Interactive (NASDAQ:PTON) is scheduled to release its fiscal 2022, third-quarter earnings on Tuesday, May 10, before the market open. The New York-based company is forecast to see an $0.83 a share loss on sales of $969 million.
Shares of Peloton—best known for its stationary exercise bikes and remote cycling classes—have lost more than 50% this year as economic re-openings cooled the pandemic-fueled boom in home-based fitness. The stock closed on Friday at $15.70.
The broader market hazards weighing on PTON's stock include the selloff in growth stocks, supply chain disruptions, and concerns that revenue and margins are shrinking for an array of companies as customers cut spending; all these further added to the dismal picture for the company.
Bloomberg reported last week that Peloton is seeking to sell a stake of about 20% in the company, hoping to find a big-name corporation or private equity firm that can help validate the business with its investment. Peloton has been contacting potential buyers, though the process remains at an early stage, the report said, citing a source.
2. Disney
The Walt Disney Company (NYSE:DIS) reports earnings for its fiscal 2022 second quarter after the closing bell on Wednesday, May 11. Analysts are expecting $20.05 billion in sales and $1.19 profit per share.
Shares of Disney have been performing better than peer media companies this year amid a strong demand for the company’s legacy businesses, such as its parks and resorts. Its stock closed on Friday at $110.29, down about 28% this year. The losses are about half those suffered by its close streaming rival, Netflix (NASDAQ:NFLX), during the same period.
Disney’s parks division generated $2.45 billion in operating income in Q1, compared with a loss a year earlier. Revenue from the resorts unit doubled from the lows seen during the pandemic.
As the company’s other entertainment assets recover from the pandemic-driven slump, DIS investors will be keen to know how the House of Mouse's streaming unit is performing as it becomes more difficult to attract new subscribers amid intense competition.
3. Rivian
Rivian Automotive (NASDAQ:RIVN), the electric truck and SUV maker backed by Amazon (NASDAQ:AMZN), is also scheduled to report its first quarter earnings on Wednesday after the market close. Analysts are forecasting a loss of $1.41 a share on sales of $133 million.
Shares of the Irvine, California-based electric vehicle maker have been under severe pressure since hitting their post-IPO high in late November, around $179, on concerns that the EV startup will struggle to ramp up production amid supply chain disruptions. The stock, which went public on Nov. 10, 2021 at $78, closed on Friday at $28.79, down more than 70% this year as analysts’ downgrades, production snags, and missed delivery targets weighed.
At one point, the post-IPO buying spree made Rivian worth more than almost 90% of S&P 500 companies, including stocks like Boeing (NYSE:BA), Starbucks (NASDAQ:SBUX) and Caterpillar (NYSE:CAT).
Rivian will burn through more than $14 billion over the next two years, analysts estimate. It could take several more years for its vehicles to produce meaningful revenue to offset cash usage, likely forcing Rivian to raise more capital amid equity market turmoil, Bloomberg reported in March.