Stocks Rally on Nvidia’s Blowout Earnings

The S&P 500 Index ($SPX) (SPY) today is currently up +1.41%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.67%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +2.25%.

Stock indexes this morning are moving higher, with the S&P 500 and Dow Jones Industrials posting new record highs and the Nasdaq 100 posting a 1-1/2 week high.  Nvidia is up more than +13% to lead a rally in chip stocks after its quarterly earnings results late Wednesday showed demand is exploding for its artificial intelligence computing hardware.

U.S. stocks have carryover support from strength in global equity markets as Japan’s Nikkei Stock Index climbed to a record high today, and the Euro Stoxx 50 rose to a 23-year high.

U.S. weekly initial unemployment claims unexpectedly fell -12,000 to a 5-week low of 201,000, showing a stronger labor market than expectations of an increase to 216,000.

The U.S. Jan Chicago Fed national activity index fell -0.32 to -0.30, weaker than expectations of -0.21.

The markets are discounting the chances for a -25 bp rate cut at 6% for the March 19-20 FOMC meeting and 29% 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 fell back from a 2-1/2 month high of 4.348% and is down -0.2 bp at 4.314%.  The 10-year German bund yield fell back from a 2-3/4 month high of 2.507% and is down -1.5 bp at 2.435%.  The 10-year UK gilt yield fell back from a 1-week high of 4.151% and is down -1.2 bp at 4.092%.  

Overseas stock markets are higher.  The Euro Stoxx 50 is up +1.54%.  China’s Shanghai Composite closed up +1.27%.  Japan’s Nikkei Stock Index closed up +2.19%.

Interest Rates

March 10-year T-notes (ZNH24) this morning are up by +3 ticks, and the 10-year T-note yield is down by -1.6 bp at 4.303%. Mar T-notes recovered from a 2-3/4 month low today and are slightly higher, and the 10-year T-note yield fell back from a 2-1/2 month high of 4.348%.  A rebound in European government bond prices sparked short-covering in T-notes this morning.

T-note prices initially moved lower on today’s sharp rally in stock prices.  Also, today’s unexpected decline in weekly U.S. unemployment claims to a 5-week low was hawkish for Fed policy and undercut T-notes. In addition, rising inflation expectations are bearish for T-notes after the 10-year breakeven inflation rate today rose to a 3-1/4 month high of 2.359%.

U.S. Stock Movers

Nvidia (NVDA) is up more than +13% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q4 revenue of $22.1 billion, stronger than the consensus of $20.41 billion, and forecasting Q1 revenue of $24 billion (plus or minus 2%), well above the consensus of $21.9 billion.  Other chip stocks are moving higher on the news, with Advanced Micro Devices (AMD) up more than +6% and Marvell Technology (MRVL) up more than +5%.  Also, Applied Materials (AMAT), Broadcom (AVGO), and ASML Holding NV (ASML) are up more than +4%.

Synopsys (SNPS) is up more than +10% after reporting Q1 adjusted EPS of $3.56, stronger than the consensus of $3.43, and raising its full-year adjusted EPS estimate to $13.47-$13.55 from a previous estimate of $13.33-$13.41.

Quanta Services (PWR) is up more than +7% after reporting Q4 revenue of $5.78 billion, well above the consensus of $5.18 billion, and forecasting 2024 revenue of $22.25 billion-$22.75 billion, stronger than the consensus of $22.06 billion.

DoorDash (DASH) is up more than +6% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $145. 

Cruise line operators are moving higher today after Royal Caribbean Cruises Ltd raised its 2024 adjusted EPS forecast to $9.90-$10.10 from a previous forecast of $9.50-$9.70. As a result, Royal Caribbean Cruises (RCL) is up more than +6%, and Carnival (CCL) is up more than +3%.  Also, Norwegian Cruise Line Holdings (NCLH) are up more than +2%. 

Builders FirstSource (BLDR) is up more than +4% after reporting Q4 net sales of $4.15 billion, better than the consensus of $4.03 billion.

Moderna (MRNA) is up more than +3% after reporting Q4 revenue of $2.81 billion, better than the consensus of $2.50 billion. 

ANSYS Inc (ANSS) is up more than +3% after reporting Q4 adjusted EPS of $3.94, stronger than the consensus of $3.71.

Etsy (ETSY) is down more than -8% to lead losers in the S&P 500 after reporting Q4 EPS of 62 cents, weaker than the consensus of 78 cents.

Teleflex (TFX) is down more than -3% after forecasting 2024 adjusted EPS continuing operations of $13.55-$13.95, the midpoint below the consensus of $13.83.

Newmont Corp (NEM) is down more than -3% after forecasting 2024 attributable gold production of 6.9 million ounces, below the consensus of 7.02 million ounces.

Keurig Dr Pepper (KDP) is down more than -4% to lead losers in the Nasdaq 100 after reporting Q4 net sales of $3.87 billion, weaker than the consensus of $3.91 billion.

AT&T (T) is down more than -2% after it reported widespread disruptions to its mobile service across the U.S. 

Rivian Automotive (RIVN) is down more than -24% after forecasting full-year vehicle production of 57,000, well below the consensus of 80,472.

Driven Brands (DRVN) is down more than -3% after reporting Q4 total revenue of $552.7 million, weaker than the consensus of $570 million, and forecast full-year revenue of $2.35 billion-$2.45 billion, below the consensus of $2.52 billion. 

Gilead Sciences (GILD) is down more than -1% after Mizuho Securities cut its price target on the stock to $90 from $101. 

Earnings Reports (2/22/2024)

Ameren Corp (AEE), Booking Holdings Inc (BKNG), Builders FirstSource Inc (BLDR), Copart Inc (CPRT), Coterra Energy Inc (CTRA), Dominion Energy Inc (D), Edison International (EIX), Entergy Corp (ETR), EOG Resources Inc (EOG), Insulet Corp (PODD), Intuit Inc (INTU), Iron Mountain Inc (IRM), Keurig Dr Pepper Inc (KDP), Live Nation Entertainment Inc (LYV), LKQ Corp (LKQ), Moderna Inc (MRNA), Newmont Corp (NEM), PG&E Corp (PCG), Pioneer Natural Resources Co (PXD), Pool Corp (POOL), Quanta Services Inc (PWR), Teleflex Inc (TFX), VICI Properties Inc (VICI).

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