Stocks Mixed Ahead of Nvidia’s Earnings

The S&P 500 Index ($SPX) (SPY) today is down -0.06%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.23%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.15%.

US stocks today are narrowly mixed.  Some mixed corporate news today is weighing on stocks.  Super Micro Computer is down more than -19% after it said it will delay filing its Annual Report on Form 10-K for the fiscal year ended June 30, 2024.  Also, Foot Locker is down more than -10% after cutting its 2025 gross margin forecast.  In addition, J M Smucker is down more than -5% after cutting its full-year net sales forecast.

On the positive side, Box Inc. is up more than +9% after reporting better-than-expected Q2 adjusted EPS and raising its 2025 adjusted EPS forecast.  Also, Kohl’s is up more than +5% after raising its 2025 EPS forecast, and Nordstrom is up more than +4% after reporting stronger-than-expected Q2 net sales and raising its full-year comparable sales forecast.

The markets are awaiting earnings results from Nvidia after today’s close.  Nvidia, the world’s most valuable chipmaker, is seen as a barometer for AI spending across much of the technology industry.  The consensus is that Nvidia’s Q2 revenue growth surged +70% y/y to $28.86 billion, and Q3 revenue is forecast at $31.85 billion.

US MBA mortgage applications rose +0.5% in the week ended August 23, with the purchase mortgage sub-index up +0.9% and the refinancing mortgage sub-index down -0.1%.  The average 30-year fixed rate mortgage fell -6 bp to a 16-month low of 6.44% from 6.50% in the prior week.

The markets are discounting the chances at 100% for a -25 bp rate cut for the September 17-18 FOMC meeting and at 35% for a -50 bp rate cut at that meeting.

Overseas stock markets today are mixed.  The Euro Stoxx 50 rose to a 5-week high and is up +0.53%. China's Shanghai Composite fell to a 6-1/2 month low and closed down -0.40%.  Japan's Nikkei Stock 225 closed up +0.22%.

Interest Rates

September 10-year T-notes (ZNU24) today are up +1 tick.  The 10-year T-note yield is down -0.4 bp at 3.831%.  T-note prices today are slightly higher.  Strength in 10-year German bunds today is providing carryover support to T-notes.  However, supply pressures are limiting the upside of T-notes as the Treasury will auction $70 billion of 5-year T-notes later today.   

European government bond yields today are mixed.  The 10-year German bund yield is down -2.7 bp at 2.261%. The 10-year UK gilt is up +0.4 bp at 4.002%.

The Eurozone July M3 money supply rose +2.3% y/y, unchanged from June and weaker than expectations of +2.7% y/y.

Swaps are discounting the chances of a -25 bp rate cut by the ECB at 98% for the September 12 meeting.

US Stock Movers

Super Micro Computer (SMCI) is down more than -19% to lead losers in the S&P 500 after it said it would delay filing its Annual Report on Form 10-K for the fiscal year ended June 30, 2024. 

J M Smucker (SJM) is down more than -5% after cutting its full-year net sales forecast to +8.5% to +9.5% from a previous forecast of +9.5% to +10.5%.

Bath & Body Works (BBWI) is down more than -4% after reporting Q2 net sales of $1.53 billion, weaker than the consensus of $1.54 billion, and forecasting Q3 EPS of 41 cents-47 cents, below the consensus of 52 cents. 

Foot Locker (FL) is down more than -10% after cutting its 2025 gross margin forecast to 29.5%-29.7% from a previous forecast of 29.8%-30%, weaker than the consensus of 29.8%. 

Lululemon Athletica (LULU) is down more than -2% after Wedbush cut its price target on the stock to $324 from $400.

nCino Inc (NCNO) is down more than -12% after forecasting Q3 revenue of $136 million-$138 million, below the consensus of $138.6 million. 

PVH Corp (PVH) is down more than -8% after forecasting Q3 adjusted EPS of about $2.50, well below the consensus of $3.12, 

Patterson Cos (PDCO) is down more than -13% after reporting Q1 net sales of $1.54 billion, weaker than the consensus of $1.59 billion. 

Insulet (PODD) closed up more than +2% to lead gainers in the S&P 500.  Insulet is adding to Tuesday’s 6% jump after the company received FDA clearance for its Omnipod 5 to treat people with Type 2 diabetes ages 18 years and older.

Box Inc (BOX) is up more than +9% after reporting Q2 adjusted EPS of 44 cents, better than the consensus of 41 cents, and raising its 2025 adjusted EPS forecast to $1.64-$1.66 from a previous estimate of $1.54-$1.58, stronger than the consensus of $1.62. 

Nordstrom (JWN) is up more than +4% after reporting Q2 net sales of $3.79 billion, above the consensus of $3.78 billion, and raising its full-year comparable sales forecast to 0% to +2% from a prior view of -1% to +2%. 

Kohl’s (KSS) is up more than +5% after raising its 2025 EPS forecast to $1.75-$2.25 from a prior estimate of $1.25-$1.85, well above the consensus of $1.53. 

AeroVironment (AVAV) is up more than +16% after Alembic Global Advisors upgraded the stock to overweight from neutral with a price target of $216. 

Earnings Reports (8/28/2024)

Affirm Holdings Inc (AFRM), Bath & Body Works Inc (BBWI), Cooper Cos Inc/The (COO), Crowdstrike Holdings Inc (CRWD), Donaldson Co Inc (DCI), Five Below Inc (FIVE), HP Inc (HPQ), J M Smucker Co/The (SJM), Kohl's Corp (KSS), NetApp Inc (NTAP), Nutanix Inc (NTNX), NVIDIA Corp (NVDA), Okta Inc (OKTA), Pure Storage Inc (PSTG), Salesforce Inc (CRM), Veeva Systems Inc (VEEV).

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