Nvidia Crushes Estimates, Unleashes Animal Spirits! – Feb 23 Market Recap
Indices
- Dow 39,131, +503 or +1.30%.
- Nasdaq 15,996, +220 or +1.39%.
- MSCI EAFE 2288.42, +31.21 or +1.38%.
- S&P 5,089, +84 or +1.68%.
- USD10Y 4.26%, -3.5bp or -0.81%.
- WTI Crude $76.57 bbl, -$2.60 or -3.28%.
Nivida Crushes Estimates, Unleashes Animal Spirits!
The market waited with bated breath for Nvidia’s (NVDA) earnings report this week and the leading global AI chip manufacturer did not disappoint; beating revenues by nearly 10% over expectations (and up +265% vs last year’s fourth quarter) as well as beating earnings by more than 11% vs expectations (and up +769% vs last year’s fourth quarter). Further, they guided their current quarter revenues higher and discussed how they have to allocate product to their clients as they cannot produce enough chips to satisfy demand. The subsequent trading day, Thursday, NVDA traded up 16% and took ten of the eleven S&P sectors along for the ride, setting new closing records on the Dow and the S&P and positioning the Nasdaq within striking distance of its all-time high (0.09% or 16 points). Interestingly, despite all the focus on technology, it was the Consumer Staples sector that led the week, up +2.2% led by Hormel Foods (HAL), Kraft-Heinz (KHC), and Conagra Brands (CAG). Technology was right behind, up +2.1% for the week.
Miscellanea
Home Depot (HD) and Walmart (WMT) recorded good quarters. Prior to the market opening on February 26, Amazon (AMZN) will join the Dow Industrial Average, replacing Walgreens Boots Alliance (WAG). Manufacturing continues to show improvement with the publication of February’s flash numbers. Final February manufacturing numbers will be published this coming week.
The Week of Feb 26 – Mar 1
As earnings season wraps up, the docket is light with Salesforce (CRM) the only headliner in the group. Economic data includes the Fed’s preferred measure of inflation, the Personal Consumption Expenditure (PCE), the first revision of Q4 GDP, and February manufacturing activity.
Economic Calendar
- Monday – N/A. Earnings: Zoom Video Communication (ZM).
- Tuesday – January Durable Goods Order, February Consumer Confidence. Earnings: Macy’s (M).
- Wednesday – Q4 GDP (first revision), Earnings: Salesforce (CRM), AMC Entertainment (AMC), TJ Maxx Companies (TJX).
- Thursday – Initial Jobless Claims, January Personal Consumption Expenditure (PCE) Earnings: N/A.
- Friday – February S&P and ISM U.S. Manufacturing Surveys. Earnings: N/A.
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Feb 23 Daily Trading Recap…
Monday – Markets Closed in Observance of President’s Day.
Tuesday – Dow -64 to 38,563, Nasdaq –144 to 15,630, S&P -30 to 4,975, USD10Y -2.0bp to 4.275%.
- Ten of eleven S&P sectors traded down today, led lower by Technology, Consumer Discretionary, and Energy.
- January Leading Economic Indicators declined by -0.4% vs -0.3% expected and vs a -0.2% decline last month.
- Amazon (AMZN) will join the Dow Industrial Average prior to the open February 26, replacing Walgreens Boots Alliance (WAG).
- Earnings: Home Depot (HD) beat their sales and earnings expectations and traded flat on the day. Walmart (WMT), beat both their sales and earnings numbers, announced the acquisition of television manufacturer Vizio, and traded up +3.23 post close. Palo Alto Networks (PANW) beat their numbers but guided down and sold off violently, down -21.07% in the extended session.
Wednesday – Dow +48 to 38,612, Nasdaq -50 to 15,580, S&P +6 to 4,981 USD10Y +5.1bp to 4.326%.
- Earnings: Nvidia (NVDA) blew out their earnings and revenue estimates and guided current quarter revenue estimates higher; NVDA traded up +10% post close. Rivian (RIVN) beat revenue estimates but lost more than expected and announced 10% layoffs; RIVN traded down -25% after hours.
Thursday – Dow +457 to 39,069 (new record close), Nasdaq +460 to 16,041, S&P +105 to 5,087 (new record close), USD10Y +0.1bp to 4.327%.
- Ten of eleven S&P sectors traded higher today, led by Technology, Consumer Discretionary, and Communication Services as last night’s Nvidia earnings sparked a broad-based rally.
- Jobless claims fell to 201,000, vs 217,000 forecast and vs. last week’s slightly revised higher print of 213,000 (originally 212,000).
- February Flash S&P Services PMI was 51.3 vs expectations of 52.4 and vs January’s 52.5 print.
- February Flash S&P Manufacturing PMI was 51.5 vs expectations of 50.1 and vs last month’s 50.7 print.
Friday – Dow +62 to 39,131 (new record close), Nasdaq -45 to 15,996, S&P +2 to 5,089 (new record close), USD10Y -6.7bp to 4.26%.
- Seven of eleven S&P sectors traded higher, led by Utilities, Materials, and Industrials.
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