Stock market today: S&P 500 flips to green before Nvidia earnings | February 24, 2024

22 Feb 2024 (9 months ago)

NVIDIA's Earnings Report

NVIDIA's earnings report is due after the market close, with analysts expecting strong growth in revenue and earnings per share.
The broader market is under pressure, with the tech sector leading the decline due to weakness in NVIDIA and other chip stocks.
NVIDIA's past earnings reports have resulted in mixed stock reactions, with the market focusing on revenue beats and forward guidance.
Analysts will be closely watching NVIDIA's forward guidance, particularly for its data center business, which has become a significant growth driver for the company.
NVIDIA's earnings report is highly anticipated as it is the fifth largest company in the S&P 500 and has contributed significantly to its returns this year.
The report could cause significant volatility in the market, with potential moves of plus or minus 10% and an impact of plus or minus 40 basis points at the index level.

The broader theme for this year is the delta in earnings recovery between sectors that had a recession last year and those that are now experiencing a high single-digit recovery.
Consensus estimates for corporate profit growth are at 11%, requiring continued strong earnings growth from the "Magnificent Seven" tech companies and a recovery in earnings from other sectors.
The expectation is for a positive year for the market, driven by earnings growth rather than multiple expansion as seen last year.
Diversification beyond the "Magnificent Seven" into other beneficiaries of the AI theme, as well as sectors like healthcare, industrials, and utilities, is recommended for outperformance.
The Federal Reserve's recent meeting minutes suggest no rush to cut rates, with expectations shifting towards three to four rate cuts this year instead of six.
An accelerated timeline for winding down quantitative tightening is a potential action point from the March meeting, which could impact long-end yields.
The possibility of another rate increase due to recent inflation is considered unlikely unless there is a substantial reacceleration in inflation.
The Fed is comfortable with the labor market coming to better balance and sees signs of rent coming down, indicating a focus on the trend rather than short-term fluctuations in inflation data.

Teledoc shares plunged after missing Q4 estimates, weaker Q1 and full-year forecasts, and slowing growth in its mental health app, Better Health.
SolarEdge shares sank due to mixed earnings, weaker revenue guidance, a slowdown in residential demand, increasing inventories, and higher interest rates.
Garmin shares hit a 52-week high after reporting strong Q4 revenue and targeting sales of $5.75 billion for 2024.
Amazon is set to replace Walgreens in the Dow Jones Industrial Average, potentially impacting the overall market.
Palo Alto Networks shares experienced their biggest decline ever as analysts downgraded their views and ratings after the company lowered its guidance.
Piper Sandler analyst Rob Owens downgraded Palo Alto Networks to "neutral" due to concerns about the company's strategy and competitive position.
Palo Alto has lowered its revenue outlook for the third quarter in a row and is changing its go-to-market strategy by offering more discounts and promotions.
Owens believes that Palo Alto's struggles are specific to the company and not indicative of a broader pullback in cybersecurity spending.
He recommends investors consider other cybersecurity stocks such as Zscaler, CyberArk, CrowdStrike, and SentinelOne.
Owens believes that cybersecurity budgets will remain strong despite economic headwinds as companies prioritize cybersecurity investments.

A strike at a Ford plant in Ohio was averted after the UAW and Ford reached an agreement on local laws.
There are still 19 other Ford plants and several GM and Stellantis plants that do not have local agreements, which could lead to further strikes.
The UAW has not provided any indication of their future strategy.

Meredith Whitney predicts a surplus of homes in the U.S. housing market due to demographic shifts and lifestyle changes.
As the population ages, more homeowners over 50 are expected to downsize and sell their homes.
The geographic distribution of the U.S. population is expected to change as people move to states with lower costs of living and better economic opportunities.
Climate change may also influence migration patterns as people move away from areas affected by extreme weather events.

President Biden's student loan forgiveness plan is moving forward, with $1.2 billion allocated to cancel debt for over 150,000 borrowers.
The White House is expected to announce new sanctions against Russia in response to the death of Alexei Navalny, but their effectiveness is uncertain given Russia's resilience to previous sanctions.
The Senate passed a foreign aid package, but its delivery to Ukraine remains uncertain due to political challenges.