What to Expect in the Week Ahead (ORCL and ADBE Earnings; Inflation and Retail Sales Data)

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What to Expect in the Week Ahead (ORCL and ADBE Earnings; Inflation and Retail Sales Data)

The upcoming week in the financial markets is poised for scrutiny as earnings reports and pivotal economic indicators are set to be released.

Monday will see $Oracle(ORCL.US)$ set the tone for the week, followed by a suite of announcements from $Manchester United(MANU.US)$, $On Holding(ONON.US)$, and $Phunware(PHUN.US)$ on Tuesday. Wednesday's lineup features $Dollar Tree(DLTR.US)$, $ZIM Integrated Shipping(ZIM.US)$, and $Lennar Corp(LEN.US)$, while Thursday's roster includes $Adobe(ADBE.US)$, $Dollar General(DG.US)$, $Futu Holdings Ltd(FUTU.US)$, and $Ulta Beauty(ULTA.US)$. The week concludes with $Groupon(GRPN.US)$ on Friday.

On the economic front, Tuesday's CPI will shed light on inflation trends, while Thursday's retail sales will offer further insight into the economic landscape.

Oracle Earnings Preview

Software giant $Oracle(ORCL.US)$ is scheduled to release its quarterly financial results after the market closes on Monday. The company's shares have been underperforming recently, yet the upcoming fiscal third-quarter earnings report presents an opportunity for the tech behemoth to showcase its prowess in the artificial intelligence sector.

Consensus estimates from FactSet suggest that Oracle is anticipated to report a 13% boost in adjusted earnings to $1.38 per share. Revenue is also forecasted to experience a growth of 7%, reaching $13.3 billion.

Analysts are particularly optimistic about the performance of Oracle's cloud services and license support segment, which encompasses the company's subscription-based software products. This division is expected to see an 11.4% increase in sales, totaling $9.9 billion.

Furthermore, Oracle's net income for the quarter is projected by Wall Street experts to ascend by 14%, hitting $3.87 billion.

Adobe Earnings Preview

$Adobe(ADBE.US)$ has seen a shift in its standing within the stock market, with evidence of increased selling by institutions casting a shadow over its former leadership position. The stock has yet to make a significant comeback since taking a steep fall on February 16th, an event that aligned with the disclosure by OpenAI—supported by $Microsoft(MSFT.US)$—of their intent to release a text-to-video generator that competes with Adobe's offerings.

As the market anticipates the announcement of Adobe's financial results for the quarter ending in February, which is scheduled for Thursday after the closing bell, analysts have set their expectations. They predict a profit of $4.38 per share, marking a 15% rise from the same period the previous year. Furthermore, Adobe's revenue is anticipated to show a 10% increase, reaching an estimated $5.13 billion.

Inflation Data in Focus

Economists are expecting a slight uptick in the monthly CPI figures, suggesting an increase from the previous month's numbers, while the annual inflation rate is projected to hold steady. According to surveys conducted by FactSet, the anticipated rise for the headline CPI on a month-over-month basis is 0.4%, which is a step up from the last reported increase of 0.3%. The year-over-year inflation rate is forecasted to remain constant at 3.1%.

Looking at the Core CPI, which removes the more unpredictable food and energy prices from the equation, a minor decrease in inflation's pace is projected. On a month-to-month and year-to-year basis, economists are estimating increases of 0.3% and 3.7%, respectively. These figures represent a slight reduction from the 0.4% monthly and 3.9% annual increases reported in January.

Nevertheless, Wall Street's focus will be particularly sharp on areas of the economy where inflation has been persistently high. The January CPI report highlighted concerns about rising costs in several sectors, including medical care, transportation, and airline fares. Of special note to consumers was the inflation in the cost of food consumed outside the home. A significant factor contributing to inflation was the increase in shelter costs, driven by a relentless climb in home prices as the demand for housing continues to surpass supply.

Consumer Financial Strain

Investors will gain further insights into consumer well-being next week, as recent earnings reports and a surge in credit delinquencies raise concerns. Despite a stronger-than-anticipated corporate earnings season, where S&P 500 profits are estimated to have increased by 4.1% in the fourth quarter, some businesses focused on consumer markets have issued careful statements.

For instance, Nordstrom's stock fell 18% this week after the retailer predicted a slump in sales for the current year, despite surpassing expectations for the fourth quarter. In addition, the rise in credit card delinquencies by over 50% last year, coupled with consumer debt ballooning to $17.5 trillion, suggests growing financial strain.

If inflation shows any increase, it may further challenge the financial stability of consumers.

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