Interest rates and inflation are once again becoming a key focal point in markets as the economic reopening and strong growth reduce the need for continued monetary easing.
In a surprising move, the Federal Reserve said last week that its policymakers have discussed tapering bond buying and they would at some point decide to begin the process of slowing the purchases. At the same time, Fed officials added two rate hikes to their 2023 forecast, where there were none previously.
That announcement accelerated selling in cyclical stocks, such as commodities. The Dow Jones Industrial Average dropped 533 points Friday to finish up its worst week since October.
As these volatile market conditions prevail, here are three stocks we're following closely—all will be announcing their latest earnings in the days ahead:
1. Nike
Sportswear giant Nike (NYSE:NKE) will release its fiscal 2021 fourth quarter earnings on Thursday, June 24, after the market close. On average, analysts are expecting $0.51 a share profit on sales of $11.09 billion.
After a strong rally following the COVID-19 plunge last year, Nike shares 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 major markets—the U.S. and China.
If Nike is able to report a strong recovery in sales, the stock might break out of its bearish spell. Nike closed on Friday at $128.41, down 9% this year.
The company's strong brand, along with its digital strategy, have positioned the athletic footwear maker of Air Jordan sneakers, among other sports apparel, for long-term growth. The Beaverton, Oregon-based company, however, suffered some supply-chain issues this year that kept products from reaching North America, its biggest market.
Revenue in Europe was also disappointing in the quarter that ended in March, partly because many stores there remain shuttered due to the pandemic.
2. FedEx
The world’s largest parcel delivery service, FedEx (NYSE:FDX), is another mega cap company that will report its fiscal 2021, fourth quarter earnings after the market closes on Thursday. On average, analysts are expecting earnings per share of $4.98 on sales of $21.47 billion.
The freight carrier and logistics firm's earnings, which come almost a month earlier than the majority of U.S. companies, are closely watched. The delivery business is considered a proxy for the health of the global economy. The latest releases from the Memphis, Tennessee-based company show that its business is booming as it caters to accelerating, pandemic-fueled demand.
The company said in March that surging package volumes and pricing gains offset increased labor costs. It also provided a bullish forecast for the full fiscal year—the first guidance it has issued since suspending its outlook 12 months ago amid uncertainty about the COVID-19 pandemic.
FedEx shares have gained about 10% this year, closing at $285.32 on Friday.
3. Paychex
Investors will also focus on the latest quarterly earnings from Paychex (NASDAQ:PAYX), scheduled to be released on Friday, June 25, ahead of the market open. The Rochester, New York-based payroll processing and human resources company is expected to report $0.67 a share profit on sales of $980 million.
Paychex results provide deep insight on the health of small and medium companies via its payroll data which includes 350,000 small business clients, their employment and wage trends as well as impacts by sector.
“Client retention remains strong and at record levels, and our results for the third quarter show that our resilient business model has helped us navigate the uncertainties created by COVID-19,” Martin Mucci, President and CEO said in the earnings statement in April.
The stock closed on Friday at $102.02, up about 9% for the year. It has recovered strongly from March 2020 when it plunged more than 40%.