Oil prices push higher amid worries over Russian supply disruptions
- U.S. August jobs report, ISM PMI surveys, last batch of earnings will be in focus during the holiday-shortened week ahead.
- Salesforce stands out with strong growth, robust analyst conviction, and a clear AI monetization story—making it a buy candidate into earnings.
- Lululemon is a sell as its Q2 earnings are likely to disappoint amid slowing consumer spending, inventory challenges, and margin pressures.
- Looking for actionable trade ideas? Subscribe now to unlock access to InvestingPro’s AI-selected stock winners!
The stock market fell on Friday, but the major averages closed out August with solid gains as traders prepared for a U.S. interest rate cut by the Federal Reserve.
For the month, the 30-stock Dow Jones Industrial Average rose 3.2%, the benchmark S&P 500 added 1.9%, while the tech-heavy Nasdaq Composite advanced 1.6%. The small-cap Russell 2000 jumped 7%.
Source: Investing.com
The holiday-shortened week ahead - which will see U.S. stock markets remain closed on Monday due to the Labor Day holiday - will be packed with several market-moving events.
Most important on the economic calendar will be Friday’s U.S. employment report for August, which is forecast to show the economy added 74,000 positions, compared to jobs growth of 73,000 in July. The unemployment rate is seen ticking up to 4.3%. Ahead of the jobs report, the ISM manufacturing and services PMIs will also be closely watched.
Source: Investing.com
As of Sunday morning, investors see an 85% chance of the Fed cutting rates by 25 basis points at its September meeting, according to the Investing.com Fed Monitor Tool.
Elsewhere, on the earnings docket, there are just a handful of corporate results due as the reporting season draws to a close, including Broadcom (NASDAQ:AVGO), Salesforce (NYSE:CRM), Lululemon (NASDAQ:LULU), Dollar Tree (NASDAQ:DLTR), Macy’s (NYSE:M), and Nio (NYSE:NIO).
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 1 - Friday, September 5.
Stock to Buy: Salesforce
Salesforce emerges as the compelling buy opportunity, with multiple factors aligning to drive positive earnings results and reinforce its pivotal role in the enterprise AI revolution. The global leader in customer relationship management software is scheduled to deliver its second quarter update after the market closes on Wednesday at 4:00PM ET. A call with CEO Marc Benioff is set for 5:00PM ET.
Market participants predict a sizable swing in CRM stock after the print drops, according to the options market, with a possible implied move of +/-9% in either direction.
In a sign of increasing optimism, analysts have made substantial upward revisions to their EPS forecasts in the weeks leading up to the earnings report. Notably, 33 out of the last 41 EPS revisions were to the upside, reflecting Salesforce’s solid footing in the CRM and enterprise cloud computing sectors.
Source: InvestingPro
Analysts project earnings per share (EPS) of $2.78 for the quarter, an 8.6% year-over-year increase, with revenue expected at $10.1 billion, also up 8.6% from last year.
The primary catalyst for Salesforce is its successful integration of artificial intelligence across its entire product suite. The AI-driven Data Cloud and Agentforce units are projected to exceed $1 billion in annual recurring revenue—proving Salesforce isn’t just riding the AI wave, it’s monetizing it.
A strong earnings report, coupled with confident guidance on future AI-driven demand, will likely validate the company’s strategy and provide a significant boost to its stock.
Source: Investing.com
CRM stock ended Friday’s session at $256.25. Shares are in a clear technical uptrend on short and medium timeframes: the 1-hour, daily, and most intraday signals flash “strong buy,” supported by a 14-day RSI of 59.12 (approaching overbought but not extreme), and every major moving average pointing higher. Any breakout above $257.18 (50DMA) could trigger further momentum.
Additionally, InvestingPro’s AI-powered models rate Salesforce with a “GREAT” Financial Health Score of 3.08, reflecting its strong growth metrics and efficient operations.
Stock to Sell: Lululemon
In contrast, Lululemon is forecast to face a disappointing quarter, prompting a more cautious investment stance as it grapples with a challenging consumer environment and a fiercely competitive market.
The yoga wear retailer—known for its $128 leggings and $68 workout tanks—is scheduled to release its second quarter update after the closing bell on Thursday at 4:05PM ET. With implied volatility pointing to a +/-11% stock move post-earnings, the risk of a miss looms large.
Analyst sentiment is overwhelmingly bearish with 23 downward revisions and no upward adjustments in the weeks preceding the report, amid a slowdown in U.S. consumer spending on discretionary items like yoga gear and sportswear.
Source: InvestingPro
Wall Street sees Lululemon reporting adjusted earnings of $2.87 per share, falling 8.9% from a year earlier and the latest news signals more pain: the sudden removal of the de minimis trade exemption could shave $0.90–$1.10 off EPS, per Wells Fargo.
Revenue growth is forecast at only 5.8%, as intensified competition from other activewear brands, like Nike (NYSE:NKE) and Alo Yoga, as well as low-cost players, such as Shein and Temu, erodes the company’s once-untouchable market position in the lucrative athleisure segment.
With these headwinds in play, Lululemon is expected to provide lackluster guidance, with operating margins expected to remain weak due to rising costs and promotional activity, as well as a hit from potential tariffs on Vietnamese imports, which account for a significant portion of its supply chain.
Source: Investing.com
LULU stock closed at $202.20 on Friday, hovering just above its 52-week low ($185.95), and the technicals are overwhelmingly bearish in the near term. The 1-hour, daily, weekly, and monthly summaries all point to “sell” or “strong sell,” with the 14-day RSI at 45.48 (neutral but trending lower).
As per InvestingPro research, recent analyst commentary paints a worrying picture of declining momentum: Morgan Stanley, Needham and BTIG all cut their price targets, warning of shrinking margins and pricing pressures.
Whether you’re a novice investor or a seasoned trader, leveraging InvestingPro can unlock a world of investment opportunities while minimizing risks amid the challenging market backdrop.
Subscribe now and instantly unlock access to several market-beating features, including:
- ProPicks AI: AI-selected stock winners with proven track record.
- InvestingPro Fair Value: Instantly find out if a stock is underpriced or overvalued.
- Advanced Stock Screener: Search for the best stocks based on hundreds of selected filters, and criteria.
- Top Ideas: See what stocks billionaire investors such as Warren Buffett, Michael Burry, and George Soros are buying.
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 Invesco QQQ Trust ETF (QQQ). I am also long on the Invesco Top QQQ ETF (QBIG), 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.