Interest rates, the price of oil and the Russia-Ukraine conflict will continue to influence trading in stock markets next week, though investors seem more willing to take risks after several weeks of risk-off sentiment leading to a downtrend in equities.
All four of the major averages finished the week on a positive note, notching a second consecutive winning week. The Dow was up 0.3% for the week, while the S&P 500 gained 1.8%, and the NASDAQ 100 Index rallied about 2%.
This rebound has occurred even as the war in Ukraine continues and key portions of the Treasury yield curve inverted last week, raising chances that the economy may be headed for a recession. Yield curve inversions have historically preceded recessions though not 100% of the time.
Amid these conflicting signals on the macro front, here are three stocks that we're following closely, including two that will announce their latest earnings in the days ahead.
1. Tesla
Tesla (NASDAQ:TSLA) shares could continue their upward trajectory next week after the largest electric carmaker announced over the weekend that it made a record number of deliveries during the first quarter of 2022.
The Austin, Texas-based EV manufacturer delivered 310,048 cars worldwide in what Elon Musk said was an “exceptionally” difficult first quarter, due to ongoing supply chain disruptions. The number was slightly ahead of analysts’ expectations.
Musk, Tesla’s chief executive officer, said in a tweet:
“This was an *exceptionally* difficult quarter due to supply chain interruptions & China zero Covid policy. Outstanding work byTesla team & key suppliers saved the day.”
Even before the weekend announcement, Tesla shares were on fire, surging more than 37% during the past two weeks on optimism that the EV maker is successfully riding through the difficult supply chain issues, while the demand for its cars remains strong. Shares closed on Friday at $1,084.59.
2. Levi Strauss
Apparel maker Levi Strauss (NYSE:LEVI), will report fiscal Q1 2022 earnings on Wednesday, Apr. 6, after the market closes. Analysts on average are expecting $0.41 a share profit on $1.54 billion sales.
The San Francisco-based clothing manufacturer—best known for its iconic Levi's brand jeans—gave a stronger-than-expected sales outlook in January and said price hikes were not hurting demand for its products.
Levi is seeing no signs of a slowdown despite inflationary headwinds that led the company to raise prices by about 10% across a range of apparel items in the fiscal fourth quarter ended Nov. 28. The strong forecast shows that consumer demand for clothing remains strong after two years of the pandemic-related slowdown.
Despite this positive outlook, investors aren’t feeling excited about owning Levi’s shares. The stock has fallen more than 20% this year, widely underperforming the S&P 500 which declined about 5% during the same period. The stock closed on Friday at $19.83.
3. Constellation Brands
The U.S.-based producer of Corona beer, Constellation Brands (NYSE:STZ), will report its Q4 2022 earnings before the market opens on Thursday, Apr. 7. Analysts are projecting earnings per share of $2.1 on sales of $2.02 billion.
The Victor, New York-based wine, beer and spirits maker, reports its latest earnings amid speculation it's in discussions to merge with Monster Beverage (NASDAQ:MNST), which makes energy drinks.
According to a Bloomberg report released in February, a merger agreement could be reached in the coming weeks if negotiations proceed smoothly, creating an entity that could be valued at about $90 billion.
The report noted:
“Any deal would create a unique combination of energy drinks, alcoholic beverages and potentially marijuana. Constellation also has a stake of almost 40% in Canopy Growth (NASDAQ:CGC), a Canadian cannabis company that sells THC-infused drinks in that country. While a tie-up with Constellation could open up growth opportunities for Monster, some analysts see limited opportunity for cost savings because they operate in different segments.”
STZ shares, which have fallen about 7% this year, closed on Friday at $233.71.