Benzinga - by Shanthi Rexaline, Benzinga Editor.
Early indications point to a dour mood as Wall Street reopens after the President’s Day public holiday, with all three major index futures trading moderately lower. Home Depot, Inc.‘s (NYSE:HD) results disappointed as the home-improvement retailer reported a sales decline for 2023, while Walmart, Inc. (NYSE:WMT) rose after the company agreed to buy VIZIO Holding Corp. (NYSE:VZIO) and reported solid quarterly results.
Traders will likely stay cautious ahead of earnings from Nvidia Corp. (NASDAQ:NVDA), due Wednesday, as the recent market run-up has been premised on AI-spending that will justify the stretched valuations of tech stocks. “Nvidia's earnings announcement this week and its guidance should signal that the AI dominance will continue,” said fund manager Louis Navellier.
“Frankly, with 215.8% forecasted sales growth, plus 387.5% forecasted earnings growth, Nvidia is expected to post spectacular quarterly results and issue positive guidance.”
Cues From Past Week’s Trading:
The two inflation reports released last week spooked investors in the week ended Feb. 16, forcing them to revise their odds of a March rate cut. In the process, the major indices, namely the Dow Industrials, the S&P 500 Index, and the Nasdaq Composite snapped their five-week winning run. The only consolidation is that the S&P 500 held the 5,000 level.
On the other hand, small-cap stocks bucked the downtrend and ended notably higher for the week.
US Index Performance In Week Ended Feb. 16
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -1.35% | 15,775.65 |
| S&P 500 Index | -0.42% | 5,005.57 |
| Dow Industrials | -0.11 | 38,627.99 |
| Russell 2000 | +1.75% | 2,045.14 |
Analyst Color:
The past week’s pullback did not deter a bullish analyst, who continues to bet on another year of solid performance for the stock market.
While the S&P 500 Index gained close to 25% in 2023, it experienced a 7.8% pullback from early February to mid-March amid the regional banking crisis, said Carson Group’s Ryan Detrick. The broader gauge also saw a 10.2% correction from end-July to Oct. 27, he added.
“This is normal, even for great yrs to have some scary moments,” the analyst said.
Futures Today
Futures Performance On Tuesday
| Futures | Performance (+/-) |
| Nasdaq 100 | -0.39% |
| S&P 500 | -0.27% |
| Dow | -0.30% |
| R2K | -0.61% |
In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) fell 0.26% to $498.20 and the Invesco QQQ ETF (NASDAQ:QQQ) 0.39% to $428.91, according to Benzinga Pro data.
Upcoming Economic Data:
The holiday-shortened week’s economic calendar is dominated by Fed speeches and comments by central bank officials that can cause gyrations in the market. The next rate-setting meeting of the Federal Open Market Committee is scheduled for March 19-20 and the central bank officials go into a quiet period between March 9 and 21.
Traders may also focus on the minutes of the January FOMC meeting, the Conference Board’s leading economic index for January, the weekly jobless claims report, the January existing home sales report and S&P Global’s flash U.S. manufacturing and service sector readings.
On Monday, the Conference Board is set to release the leading economic index for January at 10 a.m. ET. Economists, on average, expect another down month. The LEI may have dipped 0.3% month-over-month in January, steeper than the 0.1% drop in December.
The Treasury will auction three- and six-month bills at 11:30 a.m. ET and 52-week bills at 1 p.m. ET.
See also: Futures Vs. Options
Stocks In Focus:
- Discover Financial Services (NYSE:DFS) rallied over 12.70% in premarket trading after the company agreed to be acquired by Capital One Financial Corp. (NYSE:COP). The latter fell nearly 5.5%.
- GLOBALFOUNDRIES Inc. (NASDAQ:GFS) climbed over t% after the U.S. government awarded the company $1.5 billion under the Biden administration’s CHIPS and Science Act that was passed in mid-2022.
- Intel Corp. (NASDAQ:INTC) added over 4% in reaction to reports that the chipmaker is in talks with the government regarding $10 billion subsidies.
- SSR Mining Inc. (NASDAQ:SSRM) resumed its slide as the stock fell over 12% after the company said the Turkish Government authorities chose to temporarily suspend search and rescue activities in order to focus on the stabilization of the heap leach area. The company also postponed its earnings release date to Feb. 27. Last week, the stock came under intense selling pressure after it suspended production at a mine in eastern Turkey after a landslide.
- The major companies reporting their quarterly results before the market opens are Choice Hotels International, Inc. (NYSE:CHH), Expeditors International of Washington, Inc. (NYSE:EXPD), Fluor Corporation (NYSE:FLR), Owens & Minor, Inc. (NYSE:OMI) and Visteon Corp. (NYSE:VC).
- Those reporting after the close include Caesars Entertainment, Inc. (NASDAQ:CZR), Chesapeake Energy Corporation (NASDAQ:CHK), Diamondback Energy, Inc. (NASDAQ:FANG), La-Z-Boy Incorporated (NYSE:LZB), Matterport, Inc. (NASDAQ:MTTR), Palo Alto Network, Inc. (NASDAQ:PANW), Toll Brothers, Inc. (NYSE:TOL), RingCentral, Inc. (NYSE:RNG) and Workiva Inc. (NYSE:WK).
Crude oil futures fell 1.11% to $77.59 in early European session on Tuesday after the commodity rallied by 3.63% in the week ended Feb. 16. The benchmark 10-year Treasury note slipped 0.018 percentage points at 4.277%.
The Asian markets ended on a mixed note due to a lack of lead from Wall Street overnight and China’s central bank’s move to cut its five-year loan prime rate by 25 basis points to 3.95%. The cut assumes importance as the five-year LPR is used as a reference rate for mortgage rates. The one-year PLR was maintained unchanged at 3.45%.
The Chinese market, which reopened after a weeklong holiday, posted uneasy gains and the Hong Kong market advanced, while the South Korean, Japanese, New Zealand, and Australian markets retreated.
European stocks traded on a lackluster note late morning on Tuesday, with the Euro Stoxx 50 Index down about 0.1%.
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