- U.S. retail sales, housing data, more earnings in focus
- Tesla stock is a buy ahead of its 3-for-1 split next week
- Target shares set to struggle amid weak Q2 profit, sales
Stocks on Wall Street rallied on Friday to notch their fourth winning week in a row, as investors cheered signs that inflation may be peaking, raising hopes the Federal Reserve will be less aggressive on interest-rates hikes .
For the week, the blue-chip Dow Jones Industrial Average rose 2.9%, while the benchmark S&P 500and technology-heavy Nasdaq Composite jumped 3.3% and 3.1% respectively.
The S&P 500 is now up 17.9% from a mid-June low, however it remains about 11% below its all-time high in January.
The coming week is expected to be another busy one amid more earnings from notable companies like Walmart (NYSE: WMT ), Home Depot (NYSE: HD), Lowe’s (NYSE: LOW ), Kohl's (NYSE: KSS ), TJX (NYSE: TJX ), Cisco (NASDAQ: CSCO ), Applied Materials (NASDAQ: AMAT ), Deere (NYSE: DE ), and ZIM Integrated Shipping (NYSE: ZIM ).
In addition to earnings, highlights of the economic calendar are retail sales and housing data ( NAHB data , housing starts , building permits , mortgage market index ), while the Fed is set to release the minutes of its July meeting .
Regardless of which direction the market goes, below we highlight one stock likely to be in demand and another that could see further downside.
Remember, though, our time frame is just for the upcoming week.
Stock To Buy: Tesla
I expect Tesla's (NASDAQ: TSLA ) shares to continue their upward trend in the coming week as investors look ahead to the electric-vehicle maker’s 3-for-1 stock split, due to take effect later this month.
According to a proposal approved by Tesla’s shareholders at the company’s annual meeting earlier in August, each stockholder of record on Wednesday, Aug. 17, will receive a "dividend" of 2 additional shares after the close of trading on Wednesday, Aug. 24.
Tesla will then begin trading on a 3-for-1 stock-split basis on Thursday, Aug. 25, essentially making shares cheaper by one-third of what they used to be.
As a result, TSLA stock, which ended Friday’s session at $900, will carry a post-stock-split price tag closer to $300.
While stock splits are typically non-events for investors and have no impact on the company’s underlying fundamentals and valuation, they make shares cheaper and more accessible to retail traders and investors.
Indeed, the last time Tesla split its stock – 5-for-1 in August 2020 – shares rose an astonishing 81% from the announcement to the point at which shares began trading on their new split-adjusted basis.
Besides optimism ahead of the split, another positive catalyst supporting the EV pioneer is the Inflation Reduction Act, which the Senate passed over the weekend.
According to the new tax credit structure in the bill, Tesla’s electric vehicles will become less costly for U.S. consumers, which could positively impact demand and sales.