AAP Morning Comments: Short Busy Week, Holiday Shopping, Retail Earnings, Deere

We have a shortened trading week given the Thanksgiving holiday that has domestic markets closed on Thursday and opened for a shortened trading session on Friday. Some shortened weeks are quiet ones while others can be jam-packed with data, and this week is one of the latter ones, particularly on the economic data front. Meanwhile, the retail earnings palooza continues, setting the stage for the Black Friday to Cyber Monday shopping bonanza, the traditional kickoff to the year-end holiday shopping season.

If the week holds the pattern of the last few years, it means trading higher early on, then giving some of those gains back only to rally the last two days of the trading week. Typically these moves are on some of the lowest trading volumes of the year, but this week already seems to be bucking the trend when it comes to news with President Biden announcing here on Monday morning that he is renominating Jerome Powell as Federal Reserve chairman.

On the earnings front, we have a jam-packed first half of the week that once again skews heavily toward retail companies. Following comments from Walmart (WMT) and Target (TGT) about the impact of rising input and transportation costs on margins and bottom-line results, investors will be scrutinizing retail revenue vs. profit growth this week. They also will be digging into holiday shopping forecasts, with a focus on which companies are best positioned to keep their shelves stocked this year and which ones plan to flex their digital shopping muscle.. Companies in those cross hairs will be Urban Outfitters (URBN) , Abercrombie & Fitch (ANF) , Gap (GPS) and Nordstrom (JWN) among others. Sticking with retail-facing businesses, Jack in the Box (JACK) should benefit from the year-over-year surge in restaurant retail sales, but will those gains be impacted by the sharp rise in protein costs as well as higher wages?

With COVID-19 restrictions returning in parts of Europe, we suspect Zoom Video (ZM) will offer an upbeat outlook, and we'll be listening closely given how its service competes with Microsoft's (MSFT) Teams. We'll also be looking to hear what specialty contractor Dycom (DY) has to say on the 5G and gigabit fiber buildout. And with recent talks leading to a new contract with the UAW, thus ending a four-week strike, quarterly results from Deere & Co. (DE) will likely be a bump in the road for the company, but longer-term investors will be focused on growth prospects for the precision agriculture market and looking for answers on how the new infrastructure bill will lift the company's construction business.

At the time of publication, Action Alerts PLUS was long WMT, MSFT, DY and DE.