A stronger-than-expected jobs report, which typically sparks fears of an aggressive Fed, couldn’t keep the S&P 500 index from surging to new highs on Friday. Investors digested the University of Michigan consumer survey, which suggests not only is the economy heading in the right direction, but also the likelihood of a “soft landing” is closer than economists expected.

The two main ingredients for a “soft landing,” which is characterized by steady economic recovery amid decreasing inflation, are now in play. Not only is there evidence of declining inflation, we also have seen an upturn in consumer sentiment. This scenario, which now includes lower unemployment and a more balanced labor supply-and-demand dynamic, is bullish for the stock market.

As for the labor supply-and-demand dynamic, November’s job report revealed a decline in the unemployment rate, falling to 3.7% from the prior month’s 3.9%. According to the Department of Labor, the economy added 199,000 jobs in November, which is higher than the 190,000 estimate and well ahead of the 150,000 jobs added in October. Just as important, average hourly earnings, rose as expected in November, which matches the increased job additions, supporting the idea that the Fed is in fact steering the U.S. economy toward a soft landing.

Stocks soared on the news with the Dow Jones Industrial Average adding 130.49 points or 0.36% to close Friday’s session at 36,247.87. The S&P 500 rose by 0.41%, closing at 4,604.37. Notably, even as the S&P 500 had last week recorded its highest close of the year, on Friday it surpassed its intraday high for 2023, reaching 4,609 in afternoon trading. The benchmark is presently up approximately 20% for the year, reaching its highest level since March 2022.

Meanwhile, with strong performances from tech heavyweights like Nvidia (NVDA), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), Meta Platforms (META) and Tesla (TSLA), the tech-heavy Nasdaq Composite gained 0.45% to reach 14,403.97. All three major averages ended the week with solid gains. The Dow and S&P 500 completed six consecutive winning weeks, their lengthiest streak in three years, while the Nasdaq rose by 0.7%. The main question heading into the week is whether this rally will continue.

Too much good economic news can cause the Fed to maintain its hawkish stance towards interest rates which is bad news for stocks. The market’s focus on the Fed’s policy decisions is understandable. According to the CME FedWatch tool, the market believes the period of interest rate increases are over. Some traders anticipate the Fed will begin cutting rates as early as next spring, with the upcoming policy meeting scheduled for Wednesday. Here are the stocks to watch.

Oracle (ORCL) – Reports after the close, Monday, Dec. 11.

Wall Street expects Oracle to earn $1.32 per share on revenue of $13.05 billion. This compares to the year-ago quarter when earnings came to $1.21 per share on revenue of $12.28 billion.

What to watch: Oracle stock has not enjoyed the sort of momentum we have witnessed in other software stocks which have skyrocketed amid excitement over AI. Over the past three months, Oracle has suffered a 10% decline in the share price, while the S&P 500 index has risen almost 5%. Despite the under-performance, the shares are up close to 40% year-to-date, compared to the 19% rise in the S&P 500 index. There are several reasons for the solid stock performance. The company’s quarterly earnings have shown not only impressive top line growth, but also there has been a noticeable improvement in the Cloud business. The management’s strategy to shift of Oracle’s products – such as Fusion, NetSuite and OCI – into the cloud has helped filed growth in the past several quarters. The management has also produced strong cash flow and  operating leverage which investors value. What’s more, on the AI front, the company has forged strategic partnerships with two of the prominent leaders in the industry in Microsoft (MSFT) and Nvidia (NVDA). The partnerships underscore the Oracle’s competitive commitment for AI. All of that said, for the stock to keep rising on Monday, the company will need to deliver a top and bottom line beat, along with strong guidance.

Adobe (ADBE) – Reports after the close, Wednesday, Dec. 13.

Wall Street expects Adobe to earn $4.14 per share on revenue of $5.03 billion. This compares to the year-ago quarter when earnings came to $3.60 per share on revenue of $4.53 billion.

What to watch: Fueled by momentum of artificial intelligence, Adobe stock has surged 44% in the past six months, ranking highly in the basket of software stocks that have enjoyed investor enthusiasm. The stock has risen 80% year to date, crushing the 19% rise in the S&P 500 index. And there’s more gains to come, according to JPMorgan analyst Keith Weiss who has an Overweight rating and $660 price target on Adobe. Despite recent questions about the Q4 guidance for Digital Media revenue, adoption for Firefly, Weiss believes investors should feel “very comfortable” with the company’s ability to monetize generative artificial intelligence. “Bottom line, we continue to see the potential for upside to current FY24 consensus estimates across Digital Media, Digital Experience, and EPS, which should sustain momentum in ADBE shares,” Weiss wrote in an investor note. In terms of guidance for the Digital Media segment, citing the recent price increases, growth from Express and the early adoption of Firefly, Weiss expects the number to be close to $2 billion in net new revenue, This supports recent thesis that Adobe management continues to take the strategic approach to position the company for long-term success. While the stock is no longer cheap, Adobe’s new leadership position in AI will keep the shares from getting any cheaper.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Original: Earnings Feed: Weekly Preview: Earnings to Watch This Week 12-10-23 (ADBE, ORCL)