• Inflation data, Fed FOMC meeting minutes and the start of third quarter earnings season will be in focus this week.

• AMD is a buy as the company holds its annual Advancing AI 2024 event.

• Delta Air Lines is a top seller with disappointing earnings and weak guidance.

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Stocks on Wall Street closed higher on Friday, with the Dow Jones Industrial Average closing at a new record after encouraging U.S. jobs data helped allay fears of a recession.

All three major U.S. stock indexes posted gains for a fourth straight week, with the blue-chip Dow index and the benchmark S&P 500 index each gaining about 0.2% in the period. The tech-heavy Nasdaq Composite gained 0.1% for the week.

Source: Investing.com

The week ahead is expected to be busy again as investors continue to assess the outlook for the economy and interest rates.

Most important on the economic calendar on Thursday will be the US consumer price inflation report for September, which is expected to show an annual CPI rise of 2.3%, slowing from the 2.5% increase seen in August.

The CPI data will be accompanied by the release of the latest producer price figures, which will help complete the inflation picture.

Source: Investing.com

Also on the agenda are the minutes of the Federal Open Market Committee’s September monetary policy meeting, scheduled for Wednesday.

As of Sunday morning, investors see a 93 percent chance that the Fed will cut interest rates by 25 basis points at its November meeting and a 7 percent chance that no action will be taken, according to Investing.com’s Fed Monitor tool.

Elsewhere, third-quarter earnings season looks set to begin, with JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), BlackRock (NYSE:BLK), PepsiCo (NASDAQ:PEP) and Delta Air Lines (NYSE:DAL) some of the big names to be announced.

Regardless of which way the market goes, below I want to highlight one stock that is likely to be in demand and another that could fall again. However, remember my time frame is Only for the coming week, Monday, October 7th – Friday, October 11th.

Stock to buy: Advanced Micro Devices

Advanced Micro Devices (NASDAQ: AMD) stands out as a top buy this week as the highly anticipated Advancing AI 2024 event will be a major catalyst for the chip stock.

AMD shares rose 5% on Friday to end the week at $170.90, their highest since July 16. Shares of the semiconductor company have gained 16% year to date. At its current valuation, Santa Clara, California-based AMD has a market capitalization of $276.6 billion.

The story continues

Source: Investing.com

AMD’s high-profile AI event will take place in San Francisco on Thursday at 12:00 p.m. ET and will introduce AMD’s next-generation Instinct accelerators and 5th generation AMD EPYC server processors, key products in AI and high-performance computing.

Additionally, AMD is expected to discuss innovations in networking, AI PC updates, and its AI solutions ecosystem.

Led by CEO Lisa Su, the event will also feature AMD executives, ecosystem partners and developers who will discuss the technology company’s transformative role in reshaping AI and high-performance computing.

AMD shares tend to rally during the week of AI events. Last year, the stock rose nearly 10% the day after the event, and analysts expect a similar reaction this time too.

The chipmaker has a strong track record and has received several analyst upgrades following its major product presentations.

As InvestingPro points out, AMD has an above-average Financial Health Score of 3.0/5.0, supported by its positive profitability outlook and strong revenue growth prospects thanks to enthusiasm for its next-generation AI products.

Source: InvestingPro

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Stock for sale: Delta Air Lines

In contrast, Delta Air Lines faces increasing headwinds as the company reports third-quarter results at 6:30 a.m. ET on Thursday. Subdued consumer spending due to a difficult economic environment and higher oil prices have put pressure on Delta’s profitability and sales.

As expected, an InvestingPro survey of analysts’ earnings revisions shows growing pessimism ahead of the third-quarter release. All 16 analysts covering Delta have cut their earnings estimates in the past 90 days.

Source: InvestingPro

According to the options market, market participants are expecting DAL stock to rise significantly following the squeeze, with a possible implied move of 6.5% in either direction.

Earnings have sparked outsized swings in stocks this year, with Delta shares down nearly 7% when the company last reported quarterly results in July, according to data from InvestingPro.

Wall Street expects the Atlanta, Georgia-based airliner to earn $1.53 per share, a significant 24.6% decline from last year’s EPS of $2.03. This significant decline is due to rising operating costs and shrinking operating margins, which are taking a heavy toll on the company’s bottom line.

Meanwhile, Delta is expected to post a modest 4.4% increase in revenue to $15.2 billion.

Looking ahead, Delta CEO Ed Bastian is likely to strike a cautious tone about the company’s outlook for fiscal 2025, citing ongoing concerns about weaker demand for air travel as well as increasing pressure from higher fuel costs and broader economic concerns reflects concerns.

DAL shares closed at $49.28 on Friday. In 2024, shares are up 22.5%.

Source: Investing.com

At current valuations, Delta has a market cap of $31.6 billion, making it the world’s most valuable airline, ahead of industry peers such as Ryanair (NASDAQ:RYAAY), United Airlines (NASDAQ:UAL), Southwest Airlines (NYSE:LUV), LATAM Airlines (NYSE:LTM) and American Airlines (NASDAQ:AAL).

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Disclosure: At the time of writing, I am long the S&P 500 and the Nasdaq 100 through the SPDR® S&P 500 ETF and the Invesco QQQ Trust ETF. I am also long 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 company financials.

The views discussed in this article represent solely the opinion of the author and should not be construed as investment advice.

Follow Jesse Cohen on X/Twitter @JesseCohenInv for further stock market analysis and insights.

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