- CPI inflation data, Fed rate cut odds will be in focus this week.
- Oracle is a buy with a solid beat-and-raise quarter expected.
- Apple is a sell with iPhone 16 launch event on deck.
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Stocks on Wall Street tumbled on Friday, with the benchmark S&P 500 suffering its biggest weekly loss of the year as investors dumped risk assets amid mounting worries over the health of the U.S. economy.
For the week, the S&P 500 fell 4.3% while the blue-chip Dow Jones Industrial Average shed 2.9%, their worst weekly losses since March 2023. The tech-heavy Nasdaq Composite sank 5.8% for its biggest weekly drop since January 2022.
Source: Investing.com
The week ahead is expected to be another eventful one as investors continue to gauge the outlook for the economy and interest rates. As of Sunday morning, investors see a 70% chance of the Fed cutting rates by 25 basis points at its September meeting, and a 30% chance of a 50-bps rate cut.
On the economic calendar, most important will be Wednesday’s U.S. consumer price inflation report for August, which is forecast to show headline annual CPI rising 2.6% year-over-year, compared to July’s 2.9% increase.
Source: Investing.com
Elsewhere, on the earnings docket, there are just a handful of corporate results due, including Oracle (NYSE:ORCL), Adobe (NASDAQ:ADBE), GameStop (NYSE:GME), and Kroger (NYSE:KR) as Wall Street’s reporting season draws to a close.
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, September 9 - Friday, September 13.
Stock to Buy: Oracle
I believe that Oracle is poised for significant gains this week, with a potential breakout to a new record high, as the cloud and software leader will likely report another quarter of upbeat top-and bottom-line growth and provide solid guidance thanks to broad strength in its cloud business.
Oracle is scheduled to release its fiscal first quarter earnings update after the U.S. market closes on Monday at 4:05PM EST. A call with Chief Executive Officer Safra Catz as well as Chairman and Chief Technology Officer Larry Ellison is set for 5:00PM ET.
Market participants expect a sizable swing in ORCL stock after the print drops, according to the options market, with a possible implied move of approximately 7% in either direction.
Oracle’s earnings have historically caused notable stock price swings, with shares surging 13% during its last earnings release in June. Data from InvestingPro suggests a favorable trend, with the cloud company gapping up in price after the last two earnings reports.
Analyst sentiment is optimistic, with 13 upward revisions to Oracle’s earnings estimates in the past 90 days, further boosting confidence.
Source: InvestingPro
Wall Street sees the Austin, Texas-based database giant earning $1.33 per share for the August-ending quarter, rising 11.8% from the year-ago period. Meanwhile, revenue is projected to increase 5.9% annually to $13.24 billion.
Oracle’s cloud services and license support segment is expected to drive growth, benefiting from the increasing demand for cloud computing solutions, particularly in the AI space.
Given Oracle’s strong cloud business and its strategic partnership with Nvidia (NASDAQ:NVDA) and Microsoft-backed OpenAI, the company is well-positioned to maintain its positive momentum in the AI realm.
Adding to the excitement, Oracle will host its annual ‘CloudWorld’ customer conference later this week, where the market will be paying close attention to any AI-related contract announcements.
Oracle’s growing enterprise software footprint and focus on cloud computing should help drive accelerated revenue growth in the quarters ahead.
ORCL stock ended Friday’s session at $141.81, about 3% below its July 15 record high of $146.59. With a market cap of $390.8 billion, Oracle is one of the most valuable database software and cloud computing companies in the world. 
Source: Investing.com
With shares up more than 30% year-to-date, Oracle’s competitive position in the cloud services market is becoming increasingly clear.
It is worth mentioning that Oracle has an above-average InvestingPro ‘Financial Health Score’, highlighting its solid earnings prospects, and a robust profitability outlook. Additionally, it should be noted that the tech company has raised its annual dividend payout for 10 consecutive years.
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Stock to Sell: Apple
On the other hand, Apple (NASDAQ:AAPL) finds itself in a precarious position ahead of its highly anticipated iPhone 16 launch event. Historically, Apple’s product launch events have triggered a ‘sell-the-news’ reaction, and this year’s September 9 "It's Glowtime" event could follow that pattern.
Apple CEO Tim Cook is expected to unveil at least four new iPhone models at a Monday product launch event scheduled for 1:00PM EST. The new smartphone devices will be enhanced with artificial intelligence technology, which Apple has branded Apple Intelligence. Chief among them will be a rebuilt Siri voice-activated digital assistant.
In addition to new iPhones, the consumer electronics conglomerate is likely to introduce its latest Apple Watch smartwatches and new AirPods wireless earbuds. The public rollout of iOS 18 is also anticipated.
However, I expect the excitement surrounding the launch event to be muted, as it’s unclear if these updates will be enough to spark a significant upgrade cycle amongst iPhone owners.
Apple has historically seen its stock underperform around the time of new iPhone releases, with investors selling the stock after the news. Moreover, rising concerns about global smartphone demand and increased competition in the space could limit the upside potential for Apple’s stock in the near term.
Additionally, with Apple shares already up 15% year-to-date, much of the optimism around its new product lineup may already be priced in.
Source: Investing.com
AAPL stock closed at $220.82 on Friday, pulling further back from its all-time peak of $237.23 reached on July 15.
At its current valuation, Apple has a market cap of $3.36 trillion, making it the most valuable company trading on the U.S. stock exchange.
It should be noted that Apple’s stock is significantly overvalued as per the AI-powered quantitative models in InvestingPro, which points to potential downside of 17.3% from Friday’s closing price.
Source: InvestingPro
Such a move would take AAPL shares closer to their ‘Fair Value’ price target of $182.71.
Given the historical tendency for Apple’s stock to underperform post-launch, now might be the time to trim exposure ahead of the event.
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Disclosure: 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 (NYSE:XLK).
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.