Stocks Slip as Weakness in Nvidia Drags Tech Stocks Lower

Morning Markets

The S&P 500 Index ($SPX) (SPY) today is currently down -0.36%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.06%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.51%.

Stock indexes this morning are moderately lower as a -4% slide in Nvidia leads technology stocks lower ahead of Nvidia’s Q4 earnings results that will be released on Wednesday. Corporate news today was mixed for the overall market. 

On the negative side, Expeditors International of Washington is down more than -5% after reporting below-consensus Q4 EPS.  Also, Capital One Financial is down more than -4% after agreeing to buy Discover Financial Services for $35 billion.  Nvidia is down more than -4% ahead of its fiscal Q4 earnings results that are due on Wednesday.

On the positive side, Walmart is up more than +5% after reporting above-consensus Q4 total U.S. comparable sales ex-gasoline.  Also, Discover Financial Services is up more than +15% after Capital One Financial acquired the company in an all-stock transaction valued at $35 billion.  GlobalFoundries is up more than +2% as the U.S. plans to award $1.5 billion to the company under the Chips Act grant.

M&A activity is supportive of stocks.  Capital One Financial acquired Discover Financial Services in an all-stock transaction valued at $35 billion.  Also, Walmart announced that it will buy Vizio Holding for about $2.3 billion or $11.50 per share in cash.   

Increased stimulus from China may boost its growth and is positive for the global economy after Chinese lenders cut the five-year loan prime rate by 25 bp to 3.95%, a bigger cut than expectations of 10 bp to 4.10%.

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 lower.  The 10-year T-note yield is down -1.2 bp at 4.267%.  The 10-year German bund yield is down -2.4 bp at 2.387%.  The 10-year UK gilt yield is down -5.0 bp at 4.057%.  

Overseas stock markets are mixed.  The Euro Stoxx 50 is down -0.13%.  China’s Shanghai Composite closed up +0.42%.  Japan’s Nikkei Stock Index closed down -0.28%.

U.S. Stock Movers

Expeditors International of Washington (EXPD) is down more than -5% to lead losers in the S&P 500 after reporting Q4 EPS of $1.09, weaker than the consensus of $1.22.

Capital One Financial (COF) is down more than -4% after agreeing to buy Discover Financial Services for $35 billion.  Discover Financial Services (DFS) is up more than +11% to lead gainers in the S&P 500 after the acquisition announcement.

BorgWarner (BWA) is down more than -3% after BNP Paribas Exane downgraded the stock to neutral from outperform. 

Nvidia (NVDA) is down more than -4% ahead of its fiscal Q4 earnings results that are due on Wednesday. 

Tesla (TSLA) is down more than -2% after Phillip Securities downgraded the stock to neutral from accumulate.

Global Payments (GPN) is down more than -2% after announcing it intends to offer $1.75 billion in convertible senior notes due 2031. 

Home Depot (HD) is down more than -1% after forecasting full-year comparable sales to fall -1%, weaker than the consensus of a +0.18% gain.   

Walmart (WMT) is up more than +5% to lead gainers in the Dow Jones Industrials after reporting Q4 total U.S. comparable sales ex-gasoline rose +3.9%, stronger than the consensus of +3.2%. 

Southwest Airlines (LUV) is up more than +3% after Deutsche Bank upgraded the stock to buy from neutral with a price target of $42. 

GlobalFoundries (GFS) is up more than +2% as the U.S. plans to award $1.5 billion to the company under the Chips Act grant.

Intel (INTC) is up more than +1% after Bloomberg reported the company is in talks with the U.S. government for more than $10 billion in subsidies from the Chips and Science Act.

Vizio Holding (VZIO) is up more than +15% after Walmart announced it will buy the company for about $2 billion or $11.50 per share in cash.   

Earnings Reports (2/20/2024)

Allegion plc (ALLE), Caesars Entertainment Inc (CZR), Celanese Corp (CE), CenterPoint Energy Inc (CNP), CoStar Group Inc (CSGP), Diamondback Energy Inc (FANG), Expeditors International of Washington Inc (EXPD), Home Depot Inc/The (HD), International Flavors & Fragrances (IFF), Keysight Technologies Inc (KEYS), Medtronic PLC (MDT), Palo Alto Networks Inc (PANW), Public Storage (PSA), Realty Income Corp (O), Walmart Inc (WMT).

• 3 Shipping Stocks Poised to Double in 2024
• Option Volatility and Earnings Report for February 20 - 23
• Stocks Set to Open Lower as Investors Await FOMC Minutes and Nvidia Earnings
• 1 Dividend King to Buy at a Discount After Earnings