Interest rates and inflation are once again becoming a major focus in the markets as economic reopening and strong growth reduce the need for further monetary easing.
In a surprising move, the Federal Reserve said last week that policymakers had talked about phasing out bond buying and would at some point decide to begin the process of slowing down buying. At the same time, Fed officials added two rate hikes to their 2023 forecasts, where there were previously none. That announcement accelerated the sale of cyclical stocks, such as commodities. The price fell 533 points on Friday to close the worst week since October.
While these volatile market conditions prevail, here are three stocks we're following closely – they'll all be announcing their latest earnings in the coming days:
1. Nike
Sportswear giant Nike (NYSE:) will announce its results for the fourth quarter of fiscal year 2021 on Thursday, June 24, after market close. Analysts expect an average of $0.51 per share of earnings on revenue of $11.09 billion.
After a strong rally after last year's plunge from COVID-19, Nike stocks are under pressure this year. Investors are waiting for further signs of a recovery in the company's sales as economies reopen in NKE's two main markets: the US and China.
If Nike can report a strong recovery in sales, the stock could break its bearish spell. Nike closed Friday at $128.41, down 9% this year. The company's strong brand, along with its digital strategy, has positioned the athletic shoe maker of Air Jordan sneakers and other sportswear for the long haul. However, the Beaverton, Oregon-based company had to contend with supply chain issues this year that prevented products from reaching North America, its largest market.
Revenues in Europe were also disappointing in the quarter. that ended in March, in part because many stores there remain closed due to the pandemic.
2. FedEx
The world's largest parcel delivery service, FedEx (NYSE:), is another mega-cap company that will report its fiscal revenues for the fourth quarter of 2021 after the market closes on Thursday. On average, analysts expect earnings per share of $4.98 on revenue of $21.47 billion.
Freight forwarder and logistics company revenues, which come nearly a month ahead of most US companies, are being closely watched. The delivery business is considered a measure of the health of the global economy. The latest releases from the Memphis, Tennessee-based company show it is responding to increasing pandemic-fueled demand.
The company said in March that rising package volumes and price increases offset increased labor costs. It also provided a bullish forecast for the full fiscal year – the first forecast it has issued since suspending the outlook 12 months ago amid uncertainty over the COVID-19 pandemic.
FedEx shares are up about 10% this year, closing at $285.32 on Friday.
3. Paychex
Investors will also focus on Paychex's (NASDAQ:) latest quarterly results, which are expected to be released on Friday, June 25, ahead of market opening. The Rochester, New York-based payroll and human resources company is expected to report $0.67 and equity gains of $980 million.
Paychex results provide in-depth insight into the health of small and medium-sized businesses through payroll data, including 350,000 small business customers, their employment and wage trends, and the impact by industry.
“Customer retention remains strong and at record levels, and our third quarter results show that our resilient business model has helped us navigate the uncertainties created by COVID-19,” said Martin Mucci, President and CEO in the April earnings statement.
The stock closed Friday at $102.02, up about 9% for the year. It has recovered strongly since March 2020, when it fell more than 40%.
