- Recent economic data suggest domestic economy can avoid recession
- Hopes for robust employment numbers, lower inflation trends and sustained earnings in areas bulls point to
- However, some companies have issued cautious earnings forecasts
What is the state of the consumer? Struggling with still-high inflation and a reduction in pandemic-related excess savings?
Are you thriving in an affluent job market marked by improving real wages and the lowest unemployment rate since 1969? am. Both the December report and readings suggest that Goldilocks’ economic results may not be too far-fetched. Of course, the x-factor is Chairman Powell and the rest of the Federal Reserve.
There are other signs of hope. Falling commodity prices, favorable credit spreads, and lower interest rates will help ease financial conditions. Conversely, this scenario would sooner or later undermine his Fed’s mission to quell inflation.We’ll know more in the coming weeks, as major US and global companies report Fourth quarter results.
But some clues have already been left behind by major players.Let’s dig into some key pre-announcements [sourced by Wall Street Horizon] And what they mean for stocks as we embark on an uncertain 2023.
soft landing? How about a bullish takeoff for airline stocks?
One of the key preliminary earnings callers closing out 2022 was a pioneering transportation industry company within the industrial sector. Delta Air Lines (NYSE:) held his mid-December investor event at which management expressed optimism about his cash flow generation prospects in 2023 and his 2024 free showed. While business travelers return to the skies for corporate gatherings, consumers are still eager to travel, albeit strained by several indicators.
As a setback, DAL’s cost per available seat mile decreased year-over-year, according to an investor’s day conference. Increased from $1.00-1.25 to $1.35-1.40. Put this in the ‘Bullish for 2023’ category. Stocks have soared since the beginning of the year. The stock has risen from $32 a few weeks ago to about $40 in mid-January.
On Friday, January 13, Delta posted better-than-expected top and bottom-line numbers, but the initial share price fell after the company cut its EPS guidance for the first quarter of 2023. Still, the CEO said strong revenue growth and controlled costs could generate earnings of $5 to $6 per share this year.
Looking ahead, Delta executives will speak at the Airfinance Journal Dublin 2023 conference on January 17th and 18th.
- Delta Air Lines rises following bullish tentative earnings and guidance
Source: Stockcharts.com
American Airlines (NASDAQ:) also took off last week after raising its fourth-quarter earnings and earnings forecasts, as well as margin expectations. Keep an eye on his AAL at the end of this month, which will be reported on January 26th.
Harsh retail realities?
There are still many arrows in the bear pack’s quiver. One is the bleak outlook from prominent retailer Macy’s (NYSE:). The $6.2 billion market cap department store in the consumer goods sector predictably updated Wall Street on its fourth-quarter sales and earnings results. Earnings are now seen in the range of $8.16 billion to $8.40 billion, against expectations of $8.3 billion. EPS is expected to be in the range of $1.47-$1.67 while the consensus is $1.61.
This preliminary figure means a significant drop in annual revenue during the most important time on the calendar for retailers. Final results won’t be known until his BMO on Tuesday, March 7, when both same-store sales and full fourth-quarter earnings results are announced. Macy’s preliminary earnings announcement is in the “not-so-hot” bag.
- Macy’s: Stocks struggle in December, but recover early in the year
Source: Stockcharts.com
2022 Winner
Finally, let’s look at another cyclical company with less exposure to end consumers. Nucor (NYSE:) is a manufacturer of steel and steel products with distribution in the United States, Canada and Mexico. The $40 billion materials sector company had a big success last year for investors. Shares in the Charlotte-based steel company have surged about 40% after falling about 15% over the past 12 months.
Wall Street Horizon data tracking shows a tentative earnings event confirmed on December 15th. NUE’s stock price fluctuated in the weeks following the news, but by mid-January he was at an eight-month high. His actual fourth quarter reporting date is January 26th, so don’t get lost in the chaos of his busy week of earnings calls.
- Nucor Steel hits new rebound high above S&P 500
Source: Stockcharts.com
Conclusion
H1 Recession or Goldilocks? Investors seem to be slowly pulling to one side. Of course, we’ll probably end up somewhere in between. With many companies issuing preliminary sales and earnings forecasts, the corporate world is trying to send a specific message to investors. While some parts of the economy are booming, it is clear that they are facing tougher conditions in the second half of 2021 with extraordinary stimulus and ultra-low interest rates. So far, traders generally overlook the bad news.
Stay tuned for earnings season coverage on Wall Street Horizon. Stay ahead of market-moving volatility catalysts with industry-leading corporate event data that helps traders identify key dates so they can effectively manage risk.
