The Nasdaq was stymied on Wednesday as Congressional leaders grilled Facebook (FB) COO Sheryl Sandberg and Twitter (TWTR) CEO Jack Dorsey. “We were too slow to spot this and too slow to act,” Sandberg said of Facebook’s failure to identify fraudulent accounts ahead of the 2016 elections. With mid-term elections a mere two months away the social media companies did not convince the hearing members they had adequately addressed the problem. This prompted comments from the committee that Congressional action may be necessary. That did not sit well with the market, and the stocks of both companies, as well as Alphabet (GOOG), led the Nasdaq lower.
On Thursday Broadcom (AVGO) will step in front of the investing community and report earnings. The company’s stock has been guided by merger news for most of 2018. The stock started its move downward when it was denied in its bid to take over Qualcomm (QCOM) earlier this year. The subsequent announcement of a takeover of CA Technologies (CA) has resulted in a 14% decline for the stock and made it the worst major chip company in 2018. Analysts will be looking for information on the merger, and how management plans to optimize the combination. Also reporting on Thursday is value retailer Five Below (FIVE). The company’s stock has been very kind to investors the past year, rising almost 150% and far outpacing the competition. Analysts expect sales to increase 18% year-over-year, and are looking for $.38 per share.
The economic reports for both Thursday and Friday are all about jobs. Thursday we’ll get the Challenger Job-Cut Report, the ADP Employment Report and jobless claims. ADP is hoping to do a better job on Thursday when it reports projected employment numbers. The July estimate, at 219,000, was much higher than the actual numbers, missing the final government reported number by almost 50,000. The August projections are for the number to come in at a more modest 182,000. Friday the employment situation numbers are released with the unemployment rate, and payroll and wage gains. The unemployment rate is expected to move down slightly by .1% to 3.8%. Analysts will be focusing on wage gains to gauge any wage pressure impact on the Fed and its plans to gradually raise interest rates.
The first Friday of September has a limited earnings lineup, with only three companies scheduled to report. Genesco (GCO), Shiloh Industries (SHLO) and Tsakos Energy Navigation (TNP) will share the stage. Genesco is looking for a turnaround from last quarter. CEO Robert Dennis reported improved results from Journeys and Johnston & Murphy, but the gains were offset in poor performance from at Schuh and Lids. Analysts want to know if the underperforming businesses showed signs of improvement this quarter. Investors will be interested to hear how the new CFO of Shiloh Industries is taking to the position. Lillian Etzkorn