U.S. stocks ended higher on Friday following the release of the latest PCE inflation data, but the three major indexes still posted losses for the week.
Source: Investing.com
The S&P 500 and tech-heavy Nasdaq Composite snapped three-week streaks of weekly gains, falling 0.3% and 0.7% respectively. The 30-stock ended 0.2% lower for the period, while the small-cap shed 0.6%.
More volatility could be in store in the week ahead as investors assess the outlook for the economy, inflation, interest rates and corporate earnings amid ongoing trade tensions.
Most important on the economic calendar will be Friday’s U.S. employment report for September, which is forecast to show the economy added 39,000 positions. The unemployment rate is seen holding steady at 4.3%. In addition to the jobs report, the ISM manufacturing and services PMIs will also be closely watched.
Source: Investing.com
That will be accompanied by a heavy slate of Fed speakers, including district governors Chris Waller, Raphael Bostic, John Williams, and Alberto Musalem all set to make public appearances. Markets continue to price in two quarter-point rate cuts at the Fed’s upcoming meetings, which is what the central bank has projected.
And while the earnings season is all but over, a few notable companies will report in the coming week, including (NYSE:NKE), , , , and .
Regardless of which direction the market goes, below I highlight one stock likely to be in demand and another which could see fresh downside. Remember though, my timeframe is just for the week ahead, Monday, September 29 – Friday, October 3.
Stock to Buy: Tesla
(NASDAQ:TSLA) emerges as the compelling buy opportunity this week, with multiple catalysts converging that could drive significant upside beyond current market expectations.
TSLA stock closed Friday’s session at $440.40, well above both its 50-day ($351.96) and 200-day ($334.47) moving averages. Pivot points show near-term resistance at $442.36, with support at $436.17–$433.90.
Source: Investing.com
The primary catalyst is its upcoming third-quarter EV delivery and production report, scheduled for Thursday morning, which has the potential to handily beat a relatively low bar set by Wall Street. Analyst consensus from FactSet projects global Q3 deliveries at approximately 448,000 vehicles, a 17% increase from Q2 but a 3% decline year-over-year.
However, the Kalshi prediction market is far more optimistic, forecasting a record-breaking 505,000 units. This bullish outlook is driven by consumers likely rushing to capitalize on the $7,500 EV tax credit, set to expire on September 30. Tesla produces the Model 3, the Model Y, Model X and Model S, as well as the Semi and Cybertruck.
Beyond the delivery numbers, what could also drive Tesla’s stock higher are the ongoing developments in its self-driving ambitions. CEO Elon Musk announced that Full Self-Driving (FSD) Version 14 will have an “early wide” release this week. Musk has also hinted that Tesla’s robotaxis could operate without safety monitors or drivers by the end of the year.
Source: InvestingPro
It is worth mentioning that Tesla’s financial health stands out as assessed by InvestingPro’s AI-backed quantitative models, with an overall InvestingPro score of 2.67 (“GOOD”), supported by strong cash flow and profitability.
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Stock to Sell: Nike
Nike, on the other hand, is a stock to consider selling this week as it faces several headwinds heading into its latest earnings report. The sports apparel titan is slated to deliver its fiscal Q1 results after the closing bell on Tuesday at 4:15PM ET and the outlook is grim.
Despite its strong brand recognition, the sneaker giant has faced mounting challenges in recent quarters, struggling with shifting consumer preferences, increased competition, and supply chain challenges.
Analyst sentiment is overwhelmingly bearish, with 11 downward revisions in the weeks preceding the report compared to four upward adjustments. With implied volatility pointing to a +/-6.6% stock move post-earnings, the risk of a miss looms large.
Source: InvestingPro
Nike is expected to post a staggering 61% year-over-year drop in adjusted earnings per share to $0.27. Revenue is projected to fall by roughly 5% from the year-ago period to about $11 billion, reflecting slowing growth in North America and China, two of Nike’s largest markets.
Should this forecast prove accurate, it would mark the sixth consecutive quarter of declining revenue for the Beaverton-based giant, driven by intense competition from rising footwear brands like Hoka (owned by ) and . Adding to Nike’s challenges are macroeconomic headwinds, including higher tariffs that could further pressure margins.
Amid this backdrop, selling pressure has been building as Wall Street awaits concrete evidence of a successful turnaround under its new Chief Executive, Elliott Hill. With profitability plummeting and growth nowhere in sight, Nike’s earnings report is more likely to confirm ongoing weakness than signal a return to form.
Source: Investing.com
NKE stock ended at $69.31 on Friday, almost exactly on its 200-day moving average and below its 50-day, reflecting the market’s uncertainty. Technical analysis calls for “strong sell” on daily and weekly timeframes, reflecting a loss of momentum.
Furthermore, it should be noted that Nike has an InvestingPro Financial Health score of 2.2 out of 5.0, labeled as “FAIR”, due to mounting fears over weakening gross profit margins, spotty sales growth and a high debt-to-equity ratio.
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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF (SPY), and the . I am also long on the , and Invesco S&P 500 Equal Weight ETF (RSP).
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies’ financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.
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