- Trump tariff news, U.S. inflation data, retail sales, and the start of Q2 earnings season will be in focus this week.
- JPMorgan Chase stands out as a stock to buy, with its diversified business model and favorable market conditions setting the stage for an earnings beat
- With slowing growth, volume declines, and margin pressures, PepsiCo is a stock to sell this week.
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Stocks on Wall Street closed lower on Friday, in a week marked by heightened trade tensions after U.S. President Donald Trump issued new tariff announcements for a number of countries, including Canada, Japan, South Korea, and Brazil.
Source: Investing.com
Friday’s losses pushed the major averages into the red for the week. The 30-stock lost about 1%, while the benchmark and tech-heavy notched respective losses of 0.3% and 0.1%.
More volatility could be in store in the week ahead as investors assess the outlook for the economy, inflation, interest rates and corporate earnings amid escalating global trade tensions.
President Trump said Saturday that the U.S. will impose 30% tariffs on the European Union and Mexico starting on August 1.
On the economic calendar, most important will be Tuesday’s U.S. consumer price inflation report, which could spark further turmoil if it comes in higher than expectations. The CPI data will be accompanied by the release of the latest figures on producer prices, which will help fill out the inflation picture. Retail sales and several manufacturing-related reports also are on tap.
Source: Investing.com
Elsewhere, a new earnings season is set to get underway, with JPMorgan Chase (NYSE:), Bank of America (NYSE:), Citigroup (NYSE:), Wells Fargo (NYSE:), Goldman Sachs (NYSE:), Morgan Stanley (NYSE:), BlackRock (NYSE:), Netflix (NASDAQ:), Taiwan Semiconductor (NYSE:), Johnson & Johnson (NYSE:), and PepsiCo (NASDAQ:), some of the big names due to report.
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, July 14 – Friday, July 18.
Stock To Buy: JPMorgan Chase
JPMorgan Chase stands out as a promising buy this week, with multiple indicators suggesting it will beat earnings expectations. Analysts anticipate strong performance in key areas such as investment banking and asset management, driven by increased market activity and a robust deal-making environment.
JPM is scheduled to deliver its second quarter update ahead of the opening bell on Tuesday at 6:55AM EST, with both analysts and investors growing increasingly bullish about the Jamie Dimon-led megabank.
Market participants expect a possible implied move of 3.7% in either direction in shares following the update. The largest U.S. bank by market capitalization has a strong track record of beating earnings estimates.
Source: InvestingPro
Consensus estimates call for JPMorgan Chase to post Q2 earnings per share of $4.48 on revenue of $43.86 billion. Several factors support JPMorgan’s likelihood of beating earnings expectations.
In a persistently higher interest rate environment, banks like JPMorgan are direct beneficiaries. The widening spread between what they earn on loans and what they pay on deposits translates directly into higher net interest income, a key driver of revenue.
Furthermore, a rebound in investment banking activity, including mergers and acquisitions and debt underwriting, is expected to boost fees, while the bank’s wealth management division continues to benefit from a strong stock market and increased client inflows.
As such, Chief Executive Officer Jamie Dimon is poised to offer upbeat guidance, buoyed by the banking giant’s advantageous position amid the resurgence in global deal-making, merger activity, and IPO underwriting.
Source: Investing.com
JPM stock ended Friday’s session at $286.86, just below the record high close of $296 from July 3. At current levels, JPMorgan Chase has a market cap of $797.2 billion, earning the New York-based financial services firm the title of the most valuable bank in the world.
InvestingPro points out that JPMorgan Chase is in solid financial health condition, thanks to robust earnings and revenue growth prospects, combined with its attractive valuation and pristine balance sheet. Additionally, it should be noted that the megabank has maintained its dividend payout for 55 consecutive years.
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Stock to Sell: PepsiCo
In contrast, PepsiCo faces a challenging week as it prepares to announce its quarterly profit and sales figures. Analysts anticipate disappointing results, with both profit and revenue expected to fall short of market expectations.
The beverage and snack giant has been grappling with inflationary pressures, supply chain disruptions, and shifting consumer preferences toward healthier options, which have eroded margins and slowed growth.
An InvestingPro survey of analyst earnings revisions reveals growing pessimism ahead of the print, highlighting concerns about PepsiCo’s ability to navigate a tough macroeconomic environment. Traders are bracing for post-earnings volatility, with options markets pricing in a +/-4.1% implied move in either direction.
Source: InvestingPro
PepsiCo is seen earning an adjusted $2.03 per share, declining 11% from EPS of $2.28 in the year-ago period. Meanwhile, revenue is forecast to inch down 1.1% year-over-year to $22.25 billion, reflecting ongoing challenges across its portfolio.
The company is struggling with declining sales volumes in its beverage and snack segments, particularly in North America, as consumers shift to healthier alternatives, challenging PepsiCo’s core brands, such as Pepsi and Lay’s.
Additionally, rising input costs, particularly for sugar and packaging materials, are squeezing margins and weighing on profitability. Supply chain disruptions and competitive pressures in the beverage and snack categories further cloud the outlook.
Given these challenges, PepsiCo is vulnerable to an earnings miss and possibly a guidance cut, putting further pressure on the stock.
Source: Investing.com
PEP stock closed at $135.26 on Friday, not far from a recent 52-week low of $128.02 from June 25. Moving averages reinforce the bearish case, with only the very shortest timeframes offering any support.
While its financial health is stable, as per InvestingPro, the lack of price momentum and weak returns suggest limited upside in the near term.
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Disclosure: At the time of writing, I am long on the S&P 500, and the 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.
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