(Bloomberg) -- The Federal Reserve may have “more work to do” after Friday’s job report showed that hiring was “quite healthy.” The strong labor market and resilient inflation led Fed policy makers to say that the interest rate peak could be above 5% next year. S&P 500 futures rose on Monday, poised to shake off last week’s decline, including its worst rout on a Fed decision day since January 2021. Still, the market may be choppy this week due as investors await expected inflation data and the results of the US midterm congressional elections. A divided Congress could lead to political gridlock and the race, historically beneficial for the index, is projected to be a tossup.
Among this week’s notable earnings reports, Lyft (NASDAQ:LYFT) may have to field questions about its myriad cost-cutting measures and its fresh headcount reduction. Disney will have to contend with a union that is seeking higher pay for the company’s theme-park employees. Rivian may be tested as higher interest rates crimp demand for its mid-sized truck, while Ralph Lauren (NYSE:RL) and Coach parent Tapestry (NYSE:TPR) should provide insights on consumer appetite for luxury apparel amid higher costs and inflation.
Jobs are likely to remain in focus this week too, with Meta Platforms shares rising in early trading Monday after reports that it plans to begin layoffs affecting thousands of workers as early as Wednesday. That follows Apple’s moves to freeze hiring for most workers and trim its shipment outlook for the latest iPhone models by 3 million units. The revised prodcution forecast sent Apple shares (NASDAQ:AAPL) lower in premarket trading Monday. Meanwhile, Twitter is looking to re-hire dozens of staffers who were among roughly half of the company’s workers who were fired last week by Elon Musk. Several companies cut jobs in the past week, and some, from Match to Morgan Stanley (NYSE:MS), said there more dismissals could be on the horizon.
On the earnings front last week, Hershey reported better-than-expected results, including refreshed gum purchases amid waning mask-wearing, although its shares dipped after its implied fourth-quarter guidance trailed expectations. Starbucks (NASDAQ:SBUX) shares also gained after the company’s comparable sales beat estimates on improved demand despite concerns about shifting consumer trends. Warner Bros Discovery (NASDAQ:WBD) shares sank after it reported weak trends in advertising that are expected to worsen should economic conditions deteriorate.
Earnings highlights to look for this week:
Monday: Lyft (NASDAQ:LYFT) , reporting its third-quarter results after the bell, is projected to post a fifth quarter of slowing revenue growth year-over-year as its active rider base plateaus, according to Bloomberg Intelligence. Consensus calls for the company’s active clients to rise about 11.5% y/y in what would be the slowest rate since the first quarter of 2021. The company announced Thursday it would cut 13% of its staff and previously enacted a hiring freeze through the end of 2022. It has also scaled back on office space, although the benefit to its operating margins could be limited due to driver-retention incentives. While Uber’s shares soared last week after the rival ride-share firm reported better-than-expected results and guidance, Lyft is facing a driver supply disadvantage and trails Uber (NYSE:UBER) in engagement metrics.
Tuesday: Walt Disney (NYSE:DIS US), due to release its fourth-quarter results postmarket, is expected to report Disney+ subscriber additions, with consensus calling for growth of about 38% year-over-year. The streaming segment should remain strong given price increases and the debut of an ad-supported tier in December, according to Bloomberg Intelligence. The company also launched a Disney+ test that would give subscribers priority access to new merchandise. Disney’s parks have performed well despite economic concerns, as consensus calls for year-over-year revenue growth of about 39%. Still, the impact of Hurricane Ian is set to curb profit by about $100 million, and executives are likely to field questions over the closure of its Shanghai park last week due to Covid cases.
Wednesday: Rivian (NASDAQ:RIVN) will report after the closing bell following a recall and a deal with Mercedes-Benz to jointly build electric vans in Europe. The closely watched production forecast for the full year — reaffirmed as recently as last month — should be within reach, Bloomberg Intelligence wrote. That said, they pointed out that investors could shift focus to the supply-demand balance in light of an economic slowdown, given production surpassed deliveries by 17% in first three periods this year. Cash burn is likely to persist, and negative adjusted free cash flow for the fiscal third quarter is projected to worsen to $1.9 billion from $1.6 billion in the prior quarter.
Thursday: Ralph Lauren (NYSE:RL) is due before market. Analysts from Telsey Advisory Group will be keeping tabs on the American fashion house’s progress in meeting the estimate-beating sales growth targets it set at its September investor day event. So far though, the top-line numbers for fiscal 2Q are showing a slowdown in EPS and revenue y/y gains, driven by weakness in Europe and Asia. North America, where the company is planning 15-20 more store openings through the beginning of 2025, will give an indication for how consumer appetite for high-end apparel fares amid inflationary headwinds. The firm still expects freight, raw materials and labor costs to weigh on gross margin through the quarter, but anticipates elevated pricing to help with margin expansion in the back half of the year, according to Telsey.
- Tapestry (NYSE:TPR) will report premarket. Weakness in the China market continues to drag on fiscal first-quarter earnings, according to Bloomberg Intelligence, as consensus projects a 7.9% decline in the company’s adjusted EPS. Investors’ focus will be on whether higher pricing at its Coach brand in the US -- which makes up nearly 70% of sales -- could help mitigate risks in a toughening landscape. Similar to peer Ralph Lauren, the company behind the Kate Spade and Stuart Weitzman brands is focusing on a digital transformation to drive growth and engage new customers.
- Nio (NYSE:NIO) is also due before the market open. The electric carmaker is expected to give its forecast for the fourth quarter, which has so far seen disruption in both production and delivery due to Covid restrictions in China. Gross margin for the third quarter is projected to widen sequentially to 14.9% from prior quarter’s 13%. Bloomberg Intelligence says shipment growth and pricing bode well for NIO’s margin recovery, adding sales of the new and more expensive ET7 sedans and ES7 SUVs help lift average selling prices.
Friday: No major earnings expected.