Markets Today: Stock Indexes Jump on Nvidia’s Blowout Earnings Results

Morning Markets

September E-Mini S&P 500 futures (ESU23) this morning are up +0.41% at a 1-week high, and Sep Nasdaq 100 E-Mini futures (NQU23) are up +0.92% at a 2-week high.

Stock indexes this morning are moderately higher as technology stocks rally after Nvidia delivered a third-straight sales forecast that surpassed estimates.  Nvidia is up more than +7% in pre-market trading and boosted other semiconductor and artificial intelligence (AI) related stocks.  Stock indexes fell back from their best levels when bond yields rose after U.S. weekly jobless claims unexpectedly declined.

The markets await comments Friday morning from Fed Chair Powell at the Fed’s annual symposium of global central bankers at Jackson Hole, Wyoming.  With inflation falling from 40-year highs but still well above the Fed’s 2% target, Powell’s speech will be scoured to determine when the Fed may end its rate hike campaign.  ECB President Lagarde will also speak at the event.

U.S. weekly initial unemployment claims unexpectedly fell -10,000 to 230,000, showing a stronger labor market than expectations of an increase to 240,000.

U.S. July capital goods new orders nondefense ex-aircraft and parts unexpectedly rose +0.1% m/m, right on expectations.

The U.S. July Chicago Fed national activity index rose +0.45 to 0.12, stronger than expectations of -0.22.

The markets are discounting the odds at 12% for a +25 bp rate hike at the September 20 FOMC meeting and 45% for that +25 bp rate hike at the November 1 FOMC meeting. 

Global bond yields are mixed.  The 10-year T-note yield is up +3.9 bp at 4.231%.  The 10-year German bund yield rebounded from a 2-week low of 2.447% and is up +1.2 bp at 2.529%.  The 10-year UK gilt yield fell to a 2-week low of 4.390% and is down -1.0 bp at 4.458%.  

Overseas stock markets are mixed.  The Euro Stoxx 50 is down -0.03%.  China’s Shanghai Composite Index closed up +0.12%.  Japan’s Nikkei Stock Index closed up +0.87%.

The Euro Stoxx 50 today fell back from a 1-week high and is slightly lower as a decline in iron ore prices is weighing on mining stocks.  European stocks today initially moved higher on strength in semiconductor stocks after Nvidia reported stronger-than-expected quarterly earnings results.  Also, real estate and rate-sensitive stocks moved higher as European government bond yields fell, with the 10-year German bund yield and the 10-year UK gilt yield falling to 2-week lows.  On the negative side, French July business and manufacturing confidence fell more than expected.  The markets are discounting the odds at 34% for a +25 bp rate hike at the September 14 ECB meeting. 

The France Jul business confidence index fell -1 to a 2-1/4 year low of 99, weaker than expectations of no change at 100. Also, the France Jul manufacturing sentiment index fell -5 to a 2-1/2 year low of 96, weaker than expectations of 99.

China’s Shanghai Composite recovered from a 7-3/4 month low and closed slightly higher.  A rally in technology companies led the overall market higher on optimism over their earnings strength despite the overall malaise in China’s economy. Chinese seafood stocks also rallied after the Chinese customs authority said it would “comprehensively” suspend imports of aquatic products from Japan in response to Japan’s release of treated wastewater from the wrecked Fukushima nuclear power plant.  On the negative side, Chinese athleticwear makers retreated after Foot Locker cut its annual outlook for a second time and paused its dividend payment. 

Japan’s Nikkei Stock Index today rallied to a 1-week high and closed moderately higher.  Japanese tech stocks that supply Nvidia rallied today after Nvidia delivered another strong quarterly revenue forecast.  Also, artificial intelligence-related stocks moved higher on the positive earnings results from Nvidia.  In addition, weakness in the yen today against the dollar supported gains in Japanese exporter stocks.  On the negative side, Japanese seafood companies tumbled after China said it would suspend all seafood imports from Japan in response to releasing treated wastewater from the wrecked Fukushima nuclear power plant.  China is the largest single export market for Japanese fish, crustaceans, and aquatic invertebrates. 

Pre-Market U.S. Stock Movers

Nvidia (NVDA) jumped more than +7% in pre-market trading to a new record high after reporting Q2 revenue of $13.51 billion, well above the consensus of $11.04 billion, and forecasting Q3 sales of about $16 billion, stronger than the consensus of $12.5 billion.  It also approved an additional $25 billion in stock buybacks.  Other semiconductor and AI-related stocks also rallied on the news, with Super Micro Computer (SMCI) up over +8%, Palantir Technologies (PLTR) up more than +4%, and Advanced Micro Devices (AMD) up more than +3%. 

Snowflake (SNOW) climbed more than +3% in pre-market trading after reporting Q2 revenue of $674 million, better than the consensus of $662.8 million. 

Splunk (SPLK) rallied more than +12% in pre-market trading after reporting Q2 revenue of $910.6 million, above the consensus of $886.9 million, and raising its 2024 revenue forecast to $3.93 billion-$3.95 billion from a previous forecast of $3.85 billion-$3.90 billion, stronger than the consensus of $3.90 billion.

Guess?  Inc (GES) surged more than +15% in pre-market trading after reporting Q2 gross margin of 44.2%, better than the consensus of 41.1%, and raising its 2024 adjusted operating margin forecast to 9.0%-9.4% from a prior view of 8.2%-8.8%.

Autodesk (ADSK) climbed more than +6% in pre-market trading after reporting Q2 net revenue of $1.35 billion, above the consensus of $1.32 billion, and raising its 2024 revenue forecast to $5.41 billion-$5.46 billion from a previous forecast of $5.36 billion-$5.46 billion, stronger than the consensus of $5.41 billion.

Dollar Tree (DLTR) tumbled more than -3% in pre-market trading after forecasting Q3 EPS of 94 cents to $1.04, weaker than the consensus of $1.29.

Boeing (BA) slid more than -1% in pre-market trading after it reported an issue affecting its 737 Max jet, raising concerns about its delivery target.   

Medtronic Plc (MDT) lost more than -1% in pre-market trading after it said the FDA’s independent experts panel voted against recommending the company’s blood pressure treatment device, saying the risks do not outweigh the benefits.

Estee Lauder (EL) fell more than -1% in pre-market trading after Bernstein downgraded the stock to market perform from outperform.

Petco (WOOF) sank more than -10% in pre-market trading after forecasting 2024 net revenue of $6.15 billion-$6.28 billion, below the consensus of $6.29 billion.

U.S. Steel (X) dropped more than -2% in pre-market trading after Esmark said it’s no longer pursuing a takeover of the company.

Today’s U.S. Earnings Reports (8/24/2023)

Affirm Holdings Inc (AFRM), Burlington Stores Inc (BURL), Dollar Tree Inc (DLTR), Gap Inc/The (GPS), Intuit Inc (INTU), Marvell Technology Inc (MRVL), Nordstrom Inc (JWN), Petco Health & Wellness Co Inc (WOOF), Ulta Beauty Inc (ULTA), Workday Inc (WDAY).

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