Stocks dropped last week for the first time in several weeks last week, as both the Dow Jones Industrial Average (^DJI +0.63%) and the S&P 500 (^GSPC +1.02%) shed less than 1%. The indexes remain near record highs, though, with the Dow up 18% so far in 2021 while the S&P has gained a whopping 25%.
Earnings season brings more reports that could move wider markets over the next few days. Let's take a closer look at a few highly anticipated announcements on the way, from Nvidia (NVDA +0.29%), TJX Companies (TJX 1.51%), and Target (TGT 3.28%).
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Nvidia growth
Investors have high expectations heading into Nvidia's Wednesday's earnings report. The chip giant is expected to boost sales over 40% to $6.8 billion thanks to soaring demand across key portfolio categories, including gaming and its data center business. Rival AMD added to the optimism by announcing surging sales gains last week.
The buy thesis for Nvidia stock rests on its ability to maintain dominant market share positions in booming semiconductor niches like gaming and artificial intelligence. Shareholders are hoping that these wins will allow its market capitalization to expand quickly over the next few years.
This week's report won't determine the long-term value of Nvidia stock. But it's likely to set another sales record for the business.
Target's customer traffic
Target's share price rally in 2021 raises the stakes for its third-quarter announcement, set for Wednesday morning. The retailer has been a winner from pandemic-related changes to shopping behavior. It has added over $10 billion in new market share since early 2020.
This week's report should show continued growth momentum as shoppers gravitate toward its premium and exclusive merchandise. The digital selling channel should be a standout, too. Look for profit margins to continue holding around 10% as more sales shift toward that niche and as Target's average prices rise.
Investors will be watching for any signs that customer traffic is slowing heading into the peak holiday shopping season. That's unlikely. But the bigger question is whether the chain can secure enough inventory, at the right prices, to handle what should be an epic period ahead for demand to close out 2021.
TJX Companies' inventory
The Wednesday earnings report from TJX Companies, the off-price retailer, should contain plenty of good news for shareholders. Sales in the first half of the fiscal year more than doubled compared to the same period in 2020, when COVID-19 forced the closure of most of its retailing base. But revenue is also up a solid 16% compared with the same period in 2019.
TJX in mid-August revealed that its growth accelerated in Q2 as more people returned to old shopping habits. That success persuaded CEO Ernie Herrman and his team to issue cautiously optimistic comments about the third quarter. Its home furnishings segment and apparel business should both benefit from high demand in each of these areas.
The key concern heading into the holidays is whether TJX's buyers are still finding plenty of quality inventory deals. Its last report showed no concerns there, despite rising prices across the industry and major supply chain issues. If the retailer navigated through those challenges again in Q3, then it should be entering the holiday season in a great inventory position.
