Stocks Slide Ahead of Nvidia’s Earnings

Rich Asplund - Barchart - Wed Feb 21, 9:10AM CST

Morning Markets

The S&P 500 Index ($SPX) (SPY) today is currently down -0.29%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.31%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.80%.

Stock indexes this morning are moderately lower, with the Nasdaq 100 falling to a 2-week low ahead of Nvidia’s Q4 earnings results that will be released after the close. Goldman Sachs said Nvidia is “the most important stock on earth,” and its earnings results could shake up markets given its large weighting in key stock indexes. The markets are also awaiting the minutes of the Jan 30-31 FOMC meeting later this afternoon.

On the negative side, cybersecurity stocks are retreating today, led by a -25% plunge in Palo Alto Networks after it cut its full-year revenue forecast. Also, Verisk Analytics is down more than -4% after reporting weaker than expected Q4 adjusted EPS and forecasting 2024 adjusted EPS below consensus. Walgreens Boots Alliance is down more than -3% after S&P Dow Jones Indices announced the stock would be removed from the Dow Jones Industrial Average before the opening of trading on Monday. February 26, and replaced by Amazon.com.

On the positive side, Garmin Ltd is up more than +8% after reporting stronger than expected Q4 pro forma EPS. Also, homebuilding stocks are climbing today, led by a +5% jump in Toll Brothers after it reported stronger-than-expected Q1 revenue. Exelon is up more than +4% after reporting Q4 adjusted operating EPS above consensus and forecasting 2024 adjusted operating EPS above consensus.

U.S. weekly MBA mortgage applications fell -10.6% in the week ended Feb 16. The home purchase sub-index fell -10.1% to a 3-month low, and the refinancing sub-index fell -11.4%. The average 30-year fixed rate mortgage rose +19 bp to a 2-month high of 7.06% from 6.87% the prior week.

The markets are discounting the chances for a -25 bp rate cut at 12% for the March 19-20 FOMC meeting and 44% for the following meeting on April 30-May 1.

U.S. and European government bond yields today are mixed. The 10-year T-note yield is down -1.0 bp at 4.266%. The 10-year German bund yield is up +2.5 bp at 2.398%. The 10-year UK gilt yield is up +2.3 bp at 4.065%.

Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.14%. China’s Shanghai Composite closed up +0.97%. Japan’s Nikkei Stock Index closed down -0.26%.

U.S. Stock Movers

Cybersecurity stocks are under pressure today, led by a -25% plunge in Palo Alto Networks (PANW) after it cut its full-year revenue forecast to $7.95 billion-$8.00 billion from a prior forecast of $8.15 billion-$8.20 billion. Also, SentinelOne (S) and Crowdstrike Holdings (CRWD) are down more than -10%, and Zscaler (ZS) is down more than -9%. In addition, Fortinet (FTNT) is down more than -7%.

Keysight Technologies (KEYS) is down more than -9% after forecasting Q2 adjusted EPS Of $1.34 to $1.40, well below the consensus of $1.61.

Verisk Analytics (VRSK) is down more than -4% after reporting Q4 adjusted EPS of $140, weaker than the consensus of $1.44, and forecast 2024 adjusted EPS of $6.30-$6.60, below the consensus of $6.61.

Nvidia (NVDA) is down more than -2%, adding to Tuesday’s -4% loss, ahead of its fiscal Q4 earnings results that are due after today’s close.

Walgreens Boots Alliance (WBA) is down more than -3% to lead losers in the Dow Jones Industrials after S&P Dow Jones Indices announced the stock will be removed from the Dow Jones Industrial Average before the open of trading on Monday, February 26, and replaced by Amazon.com.

Celanese (CE) is down more than -5% after reporting Q4 net sales of $2.57 billion, weaker than the consensus of $2.60 billion.

International Flavors & Fragrances (IFF) is down more than -4% after forecasting full-year sales of $10.8 billion-$11.1 billion, well below the consensus of $11.42 billion.

Teladoc Health (TDOC) is down more than -21% after reporting Q4 revenue of $660.5 million, weaker than the consensus of $670.8 million, and forecast full-year revenue of $2.64 billion-$2.74 billion, well below the consensus of $2.77 billion.

Garmin Ltd (GRMN) is up more than +8% to lead gainers in the S&P 500 after reporting Q4 pro forma EPS of $1.72, stronger than the consensus of $1.38.

Public Storage (PSA) is up more than +2% after reporting Q4 core FFO/share of $4.20, better than the consensus of $4.13.

Exelon (EXC) is up more than +4% to lead gainers in the Nasdaq 100 after reporting Q4 adjusted operating EPS of 60 cents, better than the consensus of 57 cents, and forecast 2024 adjusted operating EPS of $2.40-$2.50, the midpoint above the consensus of $2.42.

Homebuilding stocks are climbing today, led by a +5% jump in Toll Brothers (TOL) after it reported Q1 revenue of $1.95 billion, stronger than the consensus of $1.87 billion. Also, PulteGroup (PHM), Lennar (LEN), and DR Horton (DHI) are up more than +1%.

Wix.com (WIX) is up more than +8% after reporting Q4 revenue of $403.8 million, above the consensus of $403.6 million.

Amazon.com (AMZN) is up more than +1% after S&P Dow Jones Indices announced the stock will replace Walgreens Boots Alliance in the Dow Jones Industrial Average before the opening of trading on Monday. February 26.

Earnings Reports (2/21/2024)

Analog Devices Inc (ADI), ANSYS Inc (ANSS), APA Corp (APA), Etsy Inc (ETSY), Exelon Corp (EXC), Garmin Ltd (GRMN), Host Hotels & Resorts Inc (HST), Marathon Oil Corp (MRO), Mosaic Co/The (MOS), NiSource Inc (NI), Nordson Corp (NDSN), NVIDIA Corp (NVDA), Synopsys Inc (SNPS), Verisk Analytics Inc (VRSK).

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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.