Nasdaq Futures Climb as Nvidia’s Blowout Sales Forecast Boosts Sentiment, U.S. PMI Data in Focus

Oleksandr Pylypenko - Barchart - Thu Feb 22, 4:36AM CST

Nasdaq 100 E-Mini futures (NQH24) are trending up +1.94% this morning as investors digested upbeat results and guidance from chip designer Nvidia and looked ahead to U.S. business activity data.

NVIDIA Corporation (NVDA) surged over +14% in pre-market trading after the semiconductor giant reported upbeat Q4 results and provided stronger-than-expected Q1 revenue guidance. “Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries, and nations,” Chief Executive Officer Jensen Huang said in the statement.

The minutes of the Federal Open Market Committee’s January 30-31 meeting indicated that the majority of Federal Reserve policymakers were concerned about the potential risks associated with initiating interest rate cuts too soon, emphasizing the need for additional confidence to ensure that inflation continues slowing toward the Fed’s 2% target, particularly in light of emerging concerns regarding “upside risks.” The minutes showed a consensus among FOMC members that borrowing costs had likely reached their peak, but the exact timing of the first interest-rate cut remained unclear. “Participants generally noted that they did not expect it would be appropriate to reduce the target range for the federal funds rate until they had gained greater confidence that inflation was moving sustainably toward 2 percent,” according to the FOMC minutes released on Wednesday.

In Wednesday’s trading session, Wall Street’s major indices ended mixed. Palo Alto Networks Inc (PANW) plunged over -28% after the cybersecurity company lowered its full-year revenue forecast. Also, Keysight Technologies Inc (KEYS) slumped more than -6% after the company provided weaker-than-expected Q2 guidance. In addition, Teladoc Inc (TDOC) tumbled over -23% after the company posted mixed Q4 results and issued disappointing FY24 revenue guidance. On the bullish side, Garmin Ltd (GRMN) climbed more than +8% after the multi-sport watches maker reported better-than-expected Q4 results. Also, Toll Brothers Inc (TOL) gained about +4% after the homebuilder posted upbeat Q1 results.

Richmond Fed President Thomas Barkin stated Wednesday that recent economic data underscored how price pressures in some sectors are still too high despite improvement in the overall inflation landscape. “Government data released last week showed consumer prices for goods declined in January, but that was more than offset by rising prices for shelter and services. You do worry that when the goods price deflation cycle ends, you’re going to be left with shelter and services higher than you like it,” Barkin said in an interview on SiriusXM, which was recorded Tuesday. Also, Fed Governor Michelle Bowman said that the current economic environment doesn’t warrant the central bank reducing interest rates. “Certainly not now,” Bowman said while responding to a question about rate cuts at an event in Washington.

Meanwhile, U.S. rate futures have priced in a 4.5% chance of a 25 basis point rate cut at the next central bank meeting in March and a 28.2% chance of a 25 basis point rate cut at May’s policy meeting.

On the earnings front, notable companies like Intuit (INTU), Booking Holdings (BKNG), MercadoLibre (MELI), PG&E (PCG), Dominion Energy (D), Moderna (MRNA), Copart (CPRT), and Keurig Dr Pepper (KDP) are slated to release their quarterly results today.

On the economic data front, all eyes are focused on the U.S. S&P Global Manufacturing PMI preliminary reading in a couple of hours. Economists, on average, forecast that the February Manufacturing PMI will stand at 50.5, compared to the previous value of 50.7.

Also, investors will likely focus on U.S. Existing Home Sales data, which was at 3.78M in December. Economists foresee the January figure to be 3.96M.

U.S. Initial Jobless Claims data will come in today. Economists expect this figure to be 217K, compared to last week’s number of 212K.

The U.S. S&P Global Services PMI preliminary reading will also be closely watched today. Economists foresee this figure to stand at 52.4 in February, compared to the previous value of 52.5.

U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be 3.879M, compared to last week’s value of 12.018M.

In addition, market participants will be looking toward a batch of speeches from Fed officials Harker, Jefferson, Cook, Kashkari, and Waller.

In the bond markets, United States 10-year rates are at 4.304%, down -0.46%.

The Euro Stoxx 50 futures are up +1.02% this morning, continuing the Nvidia-inspired global rally. Technology stocks led the gains on Thursday as investors cheered Nvidia Corp.’s better-than-expected quarterly results and sales forecast. Meanwhile, a survey released on Thursday revealed that the downturn in Eurozone business activity eased in February, with the dominant services sector breaking a six-month streak of contraction, offsetting a decline in manufacturing. Separately, the European Commission’s statistical office, Eurostat, said Thursday that the annual inflation rate in the Eurozone was confirmed at 2.8% in January, down from 2.9% in the prior month. In corporate news, Mercedes-Benz Group Ag (MBG.D.DX) climbed over +4% after the German luxury carmaker’s gloomy earnings guidance was offset by its plan for an accelerated $3.2 billion buyback. Also, Rolls-Royce Holdings Plc (RR-.LN) surged more than +8% after the U.K. engineering firm posted a stronger-than-expected annual profit. At the same time, Nestle Sa (NESN.Z.IX) slid over -4% after reporting a weaker-than-expected full-year organic sales growth and forecasting a slowdown in revenue growth.

France’s Manufacturing PMI (preliminary), France’s Services PMI (preliminary), Germany’s Manufacturing PMI (preliminary), Germany’s Services PMI (preliminary), Eurozone’s Manufacturing PMI (preliminary), Eurozone’s Composite PMI (preliminary), Eurozone’s Services PMI (preliminary), Italy’s CPI, Eurozone’s CPI, and Eurozone’s Core CPI data were released today.

The French February Manufacturing PMI came in at 46.8, stronger than expectations of 43.5.

The French February Services PMI was at 48.0, stronger than expectations of 45.7.

The German February Manufacturing PMI stood at 42.3, weaker than expectations of 46.1.

The German February Services PMI arrived at 48.2, stronger than expectations of 48.0.

Eurozone February Manufacturing PMI came in at 46.1, weaker than expectations of 47.0.

Eurozone February Composite PMI has been reported at 48.9, stronger than expectations of 48.5.

Eurozone February Services PMI arrived at 50.0, stronger than expectations of 48.8.

The Italian January CPI came in at +0.3% m/m and +0.8% y/y, in line with expectations.

Eurozone January CPI has been reported at -0.4% m/m and +2.8% y/y, in line with expectations.

Eurozone January Core CPI stood at -0.9% m/m and +3.3% y/y, in line with expectations.

Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +1.27%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +2.19%.

China’s Shanghai Composite Index closed higher today, extending its winning streak for a fourth consecutive session post-holidays following a series of recent measures implemented by authorities to stabilize the market and bolster investor confidence. Energy and brokerage stocks outperformed on Thursday. China’s AI stocks also surged after Nvidia provided an unexpectedly strong Q1 revenue forecast, with one of China’s top AI-related chipmakers, Cambricon Technologies, climbing about +10%. Meanwhile, sentiment received an additional lift from a Bloomberg News report indicating that regulators have banned major institutional investors from selling equity holdings at the start and end of trading sessions. Also, the report said that the China Securities Regulatory Commission, under the leadership of newly appointed Chairman Wu Qing, has established a task force in collaboration with the nation’s stock exchanges to monitor short selling and issue warnings to firms that profit from the wagers. In corporate news, China Traditional Chinese Medicine Holdings soared more than +24% after a consortium led by state-owned pharmaceutical giant Sinopharm revived a take-private bid for the company.

Japan’s Nikkei 225 Stock Index closed sharply higher today, topping a record intraday high reached in 1989. Chip-related stocks led the gains on Thursday following Nvidia’s strong quarterly results, with Advantest Corp surging over +7% and Tokyo Electron Ltd. climbing about +6%. Japan’s benchmark has surged about 52% from its January 2023 low, fueled by a tech rally, corporate governance reforms, and rising exporters’ profits due to a weak yen. S&P Global reported Thursday that Japan’s factory activity extended declines, while growth in the service sector moderated in February. Meanwhile, according to the Ministry of Finance, overseas investors purchased a net of 382 billion yen ($2.5 billion) worth of Japanese stocks for the week ending February 16th, marking the seventh consecutive week of net buying. In corporate news, Kufu Company Inc. plunged over -7% after the company swung to a loss in the fiscal first quarter due to a decrease of over 33% in net sales. At the same time, Toyota Motor Corp. gained more than +2% after Mizuho Securities raised its price target on the stock. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -4.82% to 19.56.

“After some recent consolidation, Nvidia’s earnings beat is just the perfect catalyst for Japanese equities to reach record highs,” said Charu Chanana, strategist at Saxo Capital Markets.

The Japanese February au Jibun Bank Japan Manufacturing PMI came in at 47.2, weaker than expectations of 48.2.

Pre-Market U.S. Stock Movers

NVIDIA Corporation (NVDA) surged over +14% in pre-market trading after the semiconductor giant reported upbeat Q4 results and provided stronger-than-expected Q1 revenue guidance.

Rivian Automotive Inc (RIVN) plunged more than -14% in pre-market trading after the company posted mixed Q4 results and guided for a significant EBITDA loss in 2024.

Etsy Inc (ETSY) slumped over -9% in pre-market trading after the retailer reported mixed Q4 results and projected a low to mid-single-digit percentage decrease in Q1 gross merchandise sales.

Royal Caribbean Cruises Ltd (RCL) climbed more than +5% in pre-market trading after raising its FY24 adjusted EPS forecast.

DoorDash Inc (DASH) gained over +3% in pre-market trading after Morgan Stanley upgraded the stock to Overweight from Equal Weight with a price target of $145.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Thursday - February 22nd

Intuit (INTU), Booking (BKNG), MercadoLibre (MELI), Pioneer Natural (PXD), Nu Holdings (NU), Copart (CPRT), Keurig Dr Pepper (KDP), Block (SQ), Cheniere Energy (LNG), Dominion Energy (D), Newmont Goldcorp (NEM), PG&E (PCG), Moderna (MRNA), VICI Properties (VICI), Quanta Services (PWR), Edison (EIX), Builders FirstSource (BLDR), Rocket (RKT), Entergy (ETR), Live Nation Entertainment (LYV), ChipMOS Tech (IMOS), Iron Mountain (IRM), Coterra Energy (CTRA), Pembina Pipeline (PBA), Ameren (AEE), Biomarin Pharma (BMRN), Pool (POOL), AMH 4 Rent (AMH), Grab Holdings (GRAB), LKQ (LKQ), Insulet (PODD), VinFast (VFS), Teleflex (TFX), Morningstar (MORN), Floor & Decor (FND), Penumbra Inc (PEN), Essential Utilities (WTRG), Carvana (CVNA), TechnipFMC (FTI), Universal Display (OLED), Comfort Systems (FIX), Americold Realty (COLD), Southwestern Energy (SWN), Ryman Hospitality Properties (RHP), Altair Engineering (ALTR), Intracellular Th (ITCI), FTI Consulting (FCN), Noble (NE), Starwood Property (STWD), Option Care Health (OPCH), Planet Fitness Inc (PLNT), Wayfair Inc (W), Sprouts Farmers (SFM), SPX Corp (SPXC), Arcadium Lithium (ALTM), Valaris (VAL), Clearway Energy C (CWEN), Arcosa (ACA), Lantheus Holdings Inc (LNTH), Main Street Capital (MAIN), Northern Oil&Gas (NOG), iRhythm Tech (IRTC), Alarm.com Holdings (ALRM), Evolent Health Inc (EVH), Select Medical (SEM), Enerplus (ERF), Enovis (ENOV), Bausch Health (BHC), Brady (BRC), MP Materials (MP), Rhythm Pharma (RYTM), Fox Factory (FOXF), Guardant Health (GH), Envestnet (ENV), Cable One Inc (CABO), Alamo (ALG), Newmark Group (NMRK), Liberty Latin America (LILA), Primo Water (PRMW), NAble (NABL), Intellia Therapeutics Inc (NTLA), Driven Brands Holdings (DRVN), Ardagh Metal Packaging (AMBP), Eldorado Gold (EGO), Kymera (KYMR), Granite Construction (GVA), Oceaneering International (OII), Trinity Industries (TRN), Laureate Education (LAUR), Vicor (VICR), Teekay Tankers (TNK), HNI (HNI), MGP Ingredients (MGPI), H&E Equipment (HEES), Diamondrock Hospitality (DRH), Tennant (TNC), Harmony Bio (HRMY), LegalZoom.com (LZ), Veracyte Inc (VCYT), Upbound (UPBD), Hillman Solutions (HLMN), NV5 Global (NVEE), eXp World (EXPI), Novocure Ltd (NVCR), Dynavax (DVAX), Xpel (XPEL), World Fuel Services (WKC), Ziprecruiter (ZIP), Maravai Lifesciences (MRVI), Vir Biotech (VIR), Relay (RLAY), indie Semiconductor (INDI), First Majestic Silver (AG), Playa Hotels & Resorts (PLYA), Cars.com (CARS), Apartment Invest (AIV), Centerra Gold (CGAU), MFA Financial (MFA), Collegium Pharmaceutical (COLL), Armada Hflr Pr (AHH), Grid Dynamics (GDYN), Plymouth Industrial (PLYM), Amylyx Pharmaceuticals (AMLX).

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On the date of publication, Oleksandr Pylypenko 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.