- This week will focus on U.S. CPI data and expectations for a Fed rate cut.
- Oracle is a strong buy ahead of earnings due to its growing cloud business and AI initiatives.
- ExxonMobil should be sold this week amid falling oil prices and economic challenges.
- Looking for actionable trade ideas? Subscribe now to access InvestingPro’s AI-selected stock winners!
U.S. stocks reached record highs briefly on Friday before falling, influenced by a disappointing August jobs report that strengthened expectations for additional Fed rate cuts, but also raised worries about the economy’s potential stagnation.
Despite the losses on Friday, the S&P 500 and the tech-focused Nasdaq ended the week higher, increasing by 0.3% and 1.1%, respectively, while small-cap stocks rose by 1%, hitting new highs for 2025. In contrast, the Dow Jones industrial average closed down 0.3% for the week.
Investors may experience increased volatility this week as they evaluate the economic outlook, inflation expectations, interest rates, and corporate earnings amid persisting trade tensions.
On the economic front, the most significant event will be Thursday’s U.S. Consumer Price Index (CPI) report, projected to show an annual increase of 2.9% for August, up from 2.7% in July. This CPI data will be supplemented by producer price figures that provide further insights into inflation.
During this period, no Fed officials will speak due to the central bank’s blackout period leading up to the September 16-17 policy meeting. Market participants are anticipating a substantial 50-basis point rate cut this month, with a nearly 90% chance of a 25-basis point cut occurring.
Stock to Buy: Oracle
Oracle is poised for a strong week as it prepares to announce its fiscal first-quarter earnings, which are expected to reflect significant growth in cloud services and AI developments. The company will post its Q1 results on Tuesday after market close, with a follow-up call featuring CEO Safra Catz and Chairman Larry Ellison.
Analysts forecast an adjusted earnings of $1.48 per share, a 6.5% rise from last year, while revenue is anticipated to increase by 12.8% to $15 billion, fueled by AI-driven demand for its services. Investor sentiment remains positive, with numerous upward revisions to sales estimates recently.
Stock to Sell: ExxonMobil
Contrarily, ExxonMobil is facing difficulties as OPEC+ plans to increase oil production starting in October, which is likely to pressure crude prices. The price of U.S. West Texas Intermediate (WTI) crude closed at $61.87 per barrel, down 2.5%. Oil prices may retreat towards the year’s low of $55.30.
With OPEC+ expected to boost production by up to 140,000 barrels per day, it aims to gain market share amid ongoing calls for lower oil prices. The company’s upcoming earnings report on October 30 is projected to show a decline in revenue and earnings, adding further pressure on ExxonMobil’s short-term outlook.
Even though ExxonMobil has a strong balance sheet and a solid dividend history, the outlook for oil prices raises significant concerns for its stock performance in the near future.
