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- US-Iran peace deal, core PCE price index, and more AI-linked earnings could dominate the coming week.
- Marvell is the high-flyer, powered by AI infrastructure momentum and set for another market-moving earnings release.
- Kohl’s, meanwhile, faces a tough retail environment and is likely to disappoint investors with its upcoming results.
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U.S. stocks closed broadly higher on Friday, with the major averages reaching new record peaks, as investors cheered signs of progress in talks to end the Iran war and a strong corporate earnings season.
Source: Investing.com
The S&P 500 advanced about 1% over the week, marking its eighth consecutive weekly gain and its longest weekly win streak since December 2023. The Dow Jones Industrial Average jumped 2.1% and posted its third positive week in four, while the tech-heavy Nasdaq Composite tacked on 0.8% and notched its seventh weekly advance in the past eight weeks.
The rallying stock market will take its cues next week from developments in negotiations between the U.S. and Iran to end the Middle East conflict. President Donald Trump said Saturday that the U.S. and Iran are close to an interim deal that will open the Strait of Hormuz.
Meanwhile, the economic calendar is muted, with the markets closed on Monday for Memorial Day. The Federal Reserve’s favorite inflation gauge, the core PCE price index, is on tap. Other economic data in the coming week include a fresh estimate of Q1 GDP and the latest consumer confidence print.
Source: Investing.com
A 25-basis point rate hike by the Fed is now fully priced in this year, according to the Investing.com Fed Monitor Tool.
Elsewhere, the earnings season cools considerably in the week ahead. Dell, Marvell, HP, Salesforce, Costco Wholesale, Best Buy, and Kohl’s are notable reports.
Source: Investing.com
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, May 25 - Friday, May 29.
Stock to Buy: Marvell
Marvell stands out as a compelling buy ahead of its upcoming earnings report, expected on Wednesday at 4:05PM ET, thanks to robust momentum in its data center and AI-related businesses.
Recent channel checks from Evercore point to "strong AI networking scale-out demand limited by supply constraints," with Marvell’s share of the 800G DSP market expected to remain dominant and potentially climb above 80% as Broadcom pivots to next-gen tech.
Source: InvestingPro
Analyst sentiment has been notably positive heading into the print. According to InvestingPro data, 19 of the last 24 analyst revisions were made to the upside, highlighting confidence in Marvell’s continued expansion.
Consensus calls for earnings of $0.79 per share, marking a 27% year-over-year increase. Revenue is projected to rise 26% to $2.4 billion, amid elevated demand for its custom AI processors and its networking chips.
Management is likely to deliver optimistic multi-year guidance, with accelerating growth driven by AI infrastructure demand as hyperscalers ramp up spending on high-bandwidth connectivity and custom silicon solutions.
Source: Investing.com
MRVL stock closed at $196.33 on Friday, flirting with its all-time high of $198.40.
Options markets are bracing for a 13% post-earnings swing, and Marvell has a notorious habit of smashing expectations, exceeding implied moves in five of its last eight quarters.
Trade Setup:
- Entry: ~$196.30
- Exit Target: $215.00 (gain +9.7%)
- Stop-Loss: $188.00 (risk -4.1%)
Stock to Sell: Kohl’s
Kohl’s, by contrast, is bracing for a far more difficult reaction to its upcoming earnings report, as it faces a challenging retail landscape, making it the stock to sell this week. The mid-tier department store is facing several headwinds that are likely to result in a miss and a cautious outlook.
Results for its first quarter are due before the U.S. market opens on Thursday at 7:00AM ET. Analyst sentiment has deteriorated significantly ahead of the report, with InvestingPro data showing four out of the seven analysts covering Kohl’s reducing their profit estimates.
Source: InvestingPro
Wall Street sees Kohl’s reporting a loss of -$0.21 per share, worsening from a loss of -$0.13 in the year-ago period, while revenue is anticipated to decline by about 1% to $2.99 billion. These figures reflect ongoing difficulties in a sector battered by shifting consumer preferences and economic pressures.
The brick-and-mortar retailer continues to grapple with operational inefficiencies and declining sales trends, particularly for discretionary items like the apparel, home goods, and accessories that are the bread and butter of Kohl’s’ business.
Management’s full-year outlook is likely to signal ongoing challenges, with net sales and comparable sales expected to range from down 2% to flat, alongside cautious adjusted EPS guidance.
Source: Investing.com
KSS stock closed at around $13 on Friday. Shares have underperformed the S&P 500 in the year-to-date, reflecting mounting investor concerns about Kohl’s long-term prospects as it struggles to adapt to the evolving retail landscape.
With implied volatility pointing to a +/-15.1% stock move post-earnings, the risk of a miss looms large.
Trade Setup:
- Entry: ~$13.00
- Exit Target: $11.73 (gain +10.1%)
- Stop-Loss: $14.15 (risk -8.3%)
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Disclosure: This is not financial advice. Always conduct your own research.
At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF, and the Invesco QQQ Trust ETF. I am also long on the Technology Select Sector SPDR ETF. 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.