Tech Giants Slide In Run-Up To Nvidia’s Results: Markets Wrap

(Bloomberg) -- Tech shares dragged the stock market away from its all-time highs as traders sifted through the latest batch of corporate earnings and awaited more clues on the Federal Reserve’s outlook.

Wall Street is eagerly awaiting Nvidia Corp.’s earnings due Wednesday for confirmation that the stock can meet sky-high expectations set by the boom in artificial intelligence. Another round of better-than-estimated company profits failed to dispel uncertainties about monetary policy, with bets on imminent rate cuts dissipating. While this week’s economic calendar will be light, investors will also be focused on remarks from a slew of Fed speakers.

“We anticipate plenty of in-flight turbulence during the coming weeks as the S&P levels off around 5,000,” said Craig Johnson at Piper Sandler. “February’s performance so far has been exceptionally stronger than its historical seasonality, and we suspect the back half of the month will be a time for bulls to rest and trim some profits.”

The S&P 500 fell below 5,000. Nvidia — the best-performer in the benchmark gauge this year — sank 5% to drive losses in big tech. Walmart Inc. rallied after reporting strong earnings. Treasury 10-year yields were little changed at 4.27%. The dollar dropped.

Nvidia’s revenue is expected to more than triple for a second straight quarter, buoyed by soaring demand in its data center business, which accounts for 80% of the chipmaker’s sales. AI demand remains strong, especially with Meta Platforms Inc. and Tesla Inc. continuing to load up on graphics processing units, Susquehanna said. 

To Matt Maley at Miller Tabak + Co., there is little question that Nvidia will report excellent earnings this week. However, the stock has not always responded well to fabulous earnings.  

“Sometimes, their expectations are SO high that we get a ‘sell the news’ reaction, Maley said. “We don’t know which reaction we’ll get this week, so we wouldn’t be surprised if investor and traders sit on their hands until they report this Wednesday evening.”

Corporate Highlights:

• Walmart Inc. also said it agreed to buy smart-TV maker Vizio Holding Corp. for about $2.3 billion.
• Macy’s Inc. said it received nine nominations to its board from Arkhouse Management Co., the activist investor leading an effort to acquire the department-store company.
• Home Depot Inc. reported a fifth straight comparable sales decline, underscoring a drop in demand for house improvement due to high mortgage rates and a slowdown in construction.
• The Biden administration is in talks to confer more than $10 billion in subsidies to Intel Corp., people familiar with the matter said, in what would be the largest award yet under a plan to bring semiconductor manufacturing back to US soil.
• The US plans to award $1.5 billion to GlobalFoundries Inc., the largest domestic maker of made-to-order semiconductors, as part of the Biden administration’s effort to strengthen the nation’s chip production.
• Capital One Financial Corp. agreed to buy Discover Financial Services in a $35 billion all-stock deal to create the largest US credit card company by loan volume, giving the combined entity a stronger foothold to compete with Wall Street’s behemoths.
• Barclays Plc said it will go on a major cost-cutting drive, re-organize its reporting structure and return at least £10 billion to shareholders in the coming years, ending months of speculation about the future direction of one of Europe’s largest investment banks.
• Bayer AG plans to slash its dividend by 95% in an effort to dig itself out of a hole created by the acquisition of Monsanto Co. that saddled the German company with massive debt and waves of litigation.

Key Events This Week:

• Eurozone consumer confidence, Wednesday
• Nvidia, HSBC earnings, Wednesday
• Federal Reserve releases minutes from its January meeting, Wednesday
• Atlanta Fed President Raphael Bostic speaks, Wednesday
• Eurozone S&P Global Services PMI, S&P Global Manufacturing PMI, CPI, Thursday
• US initial jobless claims, US existing home sales, Thursday
• ECB issues account of January meeting, Thursday
• Fed Governor Lisa Cook and Minneapolis Fed President Neel Kashkari speak, Thursday
• China property prices, Friday
• Germany IFO business climate, GDP, Friday
• ECB publishes 1- and 3-Year inflation expectations survey, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.6% as of 9:49 a.m. New York time
• The Nasdaq 100 fell 0.9%
• The Dow Jones Industrial Average fell 0.1%
• The Stoxx Europe 600 fell 0.3%
• The MSCI World index fell 0.3%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro rose 0.5% to $1.0832
• The British pound rose 0.5% to $1.2655
• The Japanese yen rose 0.2% to 149.89 per dollar

Cryptocurrencies

• Bitcoin rose 0.3% to $52,053.01
• Ether fell 0.9% to $2,941.36

Bonds

• The yield on 10-year Treasuries declined one basis point to 4.27%
• Germany’s 10-year yield declined two basis points to 2.39%
• Britain’s 10-year yield declined five basis points to 4.06%

Commodities

• West Texas Intermediate crude rose 0.5% to $79.55 a barrel
• Spot gold rose 0.5% to $2,027.02 an ounce

This story was produced with the assistance of Bloomberg Automation.

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