Despite Federal Reserve chairman Jerome Powell uttering the r-word (recession), US stocks staged a recovery this past week.

Travel stocks and growth stocks bounced back as oil companies gave back some of the gains they’d delivered so far in 2022. This reflected weakness in crude oil markets as traders were spooked by signs high prices are leading to demand destruction.

One reason for the improved investor sentiment was Powell’s stance when he testified before lawmakers in Washington on Wednesday. His tone and some weak economic data suggested the pace of rate increases might ease a little because of the risk of a slowdown.

The big US banks could be in line to reward shareholders with generous dividends after they passed the regulators’ latest stress test with flying colours.

Logistics firms Fedex (FDX:NYSE) managed strong share price gains as it delivered earnings ahead of expectations on 23 June having dealt with some of its operational problems.

NIKE

Sports apparel business Nike (NKE:NYSE) reports its fourth quarter earnings after the market close on 27 June and several things will be in focus for investors.

First and foremost attention will be paid to the extent to which the cost of living crisis is affecting demand for the company’s products.

The hit from the company’s Russian exit may be quantified after the recent decision to exit the country over its invasion of Ukraine.

Nike has previously flagged that Russia and Ukraine combined accounted for less than 1% of group revenue.

China is a much bigger market for Nike and here it has been hit by the Xinjiang cotton controversy, where the company endured a backlash after expressing concern of Uighur forced labour in cotton production.

Recent Covid lockdowns could also impact demand and add to the company’s supply chain issues. A final point of interest is likely to be progress on the direct-to-consumer strategy which should help boost Nike’s margins.

MODERNA

Shares in biotech firm Moderna (MRNA:NASDAQ) jumped 18% to $143 this past week after a positive decision on the roll-out of its Covid-19 vaccine among minors.

Advisors to the US CDC (Center for Disease Control) unanimously voted to recommend the use of the vaccine for children and adolescents aged between six and 17.

The FDA (Food & Drug Administration) approved the use of Moderna’s vaccine for children as young as six months old.

Roughly 25 million US children and adolescents have yet to receive even a single dose of a Covid-19 vaccine, according to the CDC.

LENNAR CORP

After slumping last week on disappointing US housing starts data, shares in home builder Lennar (LEN:NYSE) rebounded this week following better than expected second quarter results.

Adjusted earnings for the three months to the end of May were $4.69 per share against $2.95 a year earlier and a consensus forecast of $3.96.

Revenues for the quarter were up 30% to $8.36 billion, beating a market estimate of $8.09 billion due to a greater number of home deliveries and a higher gross margin despite increased raw material and labour costs.

Lennar forecast an acceleration in home sales in the third quarter and a further increase in its gross margin.

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Issue Date: 24 Jun 2022