👉 The Investing Week Ahead: Back Below Euphoric Levels

Let’s dive right in.

What We’re Watching:

Palo Alto Networks’ last quarterly report (in May) featured a disappointing sales forecast — with shorter contracts and strategy shifts that weighed down on growth. The company has experienced slower growth, with Q3 revenue rising by +15% to $1.98 billion (the slowest since 2020) and billings increasing by just +3% (the smallest gain since its IPO in 2012).

Despite this — annualized recurring revenue for “next-generation products” grew +47% to $3.79 billion, and remaining performance obligations rose +23% to $11.3 billion. CEO Nikesh Arora emphasized the strength of the business in subscription revenue and cybersecurity spending.

Palo Alto Networks, Inc. (PANW) Stock Performance, 5-Year Chart, Seeking Alpha

The last quarterly report from Lowe’s (in May) revealed a beat on earnings and revenue, but didn’t leave investors feeling fantastic. Lowe's exceeded Wall Street's expectations for Q1 earnings, reporting $3.06 per share versus the anticipated $2.94, and revenue of $21.36 billion compared to the expected $21.12 billion. However, sales fell -4.4% year-over-year to $22.35 billion — marking the fifth consecutive quarter of declines — driven by a -6.2% drop in comparable sales.

DIY customers spent less on high-ticket items like outdoor grills and patio sets, leading to a -3.1% decrease in transactions and a -1% drop in the average ticket size. Despite challenges, Lowe's maintained its full-year forecast of $84-$85 billion in total sales and $12-$12.30 in earnings per share. Gains in pro customer sales, which remained flat compared to the prior year, and online sales helped offset the decline in DIY spending.

Lowe’s Companies, Inc. (LOW) Stock Performance, 5-Year Chart, Seeking Alpha

"With the market pullback, especially the more aggressive pullback on the growth side of the market, sentiment looks much more balanced now than it did heading into this month.” 

— Drew Pettit, Citi US Equity Strategy Director

Meanwhile, the number of homeowners grew by just +0.6% to 86.3 million, the smallest uptick since 2019. As homeownership becomes increasingly difficult, owning a home is now considered a luxury.

We’re all starting to wonder the same thing… Is this a trend that’s going to continue, or is this completely natural? Our previous peak for tech layoffs was in January of 2023 with nearly 109,000 employees fired. When comparing 2023 to 2024 (as shown in the chart above) — things seem pretty standard for now.

TechCrunch made an incredibly helpful list linked here!

What We’re Watching:

This week, updates from the Jackson Hole Economic Policy Symposium will be in full focus.

On Friday morning — markets priced in a 76% chance the Fed would cut interest rates by 25 basis points by the end of its September meeting. A week ago — markets had priced in a +50% chance the Fed would implement a larger cut and slash rates by 50 basis points. 93% of 189 global asset managers surveyed by Bank of America expect global interest rates to be lower within the next 12 months.

"An evolution of the July FOMC language would suggest the committee is 'very close' or 'close' to the point where easing is likely to occur. A more dovish signal could be a statement that the committee wants to avoid 'unexpected weakness' in the labor market, rather than simply responding to it after it occurs."

— Michael Gapen, Head of Economics at Bank of America

New single-family home sales in the U.S. dropped -0.6% in June 2024 to an annualized rate of 617K — the lowest in seven months and below the expected 640K. High prices and mortgage rates continue to strain affordability. This week, we find out if expected rate cuts are already leading to any sort of uptick.