Daily Markets: Equities Look to Bounce Back, Nvidia and the Fed on the Radar

Today’s Big Picture

Asia-Pacific equity markets finished the day lower except for India’s SENSEX which gained 0.29%, and China’s Shanghai Composite which rose 0.54%. Japan’s Nikkei declined 0.26%, Australia’s ASX All Ordinaries shed 0.63%, Taiwan’s TAIEX fell 1.28%, Hong Kong’s Hang Seng dropped 1.42%, and South Korea’s KOSPI closed 1.91% lower in a broad decline that saw a number of sectors contribute to overall returns. European markets are mostly up in midday trading and U.S. equity futures are pointing to a higher open.

Equities are shrugging off pre-market declines from Adobe (ADBE) and Ulta Beauty (ULTA) in a bid to recapture some of yesterday’s declines. Despite that move, all major stock market indices, save for the Russell 2000, are on track to put in another positive week. Investors should be mindful of the leading nature of that small-cap index and on the overall market as they get ready for Nvidia’s (NVDA) upcoming GTC developer conference that begins on Sunday and features a keynote from CEO Jensen Huang on Tuesday, February 18.

One day later, the Fed will conclude its latest policy meeting, and while the market expects no change in policy, the market will lean into Fed Chair Powell’s comments and the updated set of economic projections. Given this week’s February inflation data, odds are high the Fed will stick to its “need to see more progress on a sustained basis” mantra as it lifts its 2024 GDP and inflation forecasts. The subliminal message is shaping up for rate cut timing to move into 2H 2024, something that could lead to a modest resetting of GDP and earnings expectations for 2024. 

Data Download

International Economy

We are closing out the week with yet another quiet day of non-U.S. economic data. Enjoy it while you can reader, for Monday brings the latest Industrial Production and Retail Sales data from China as well as the next look at inflation in the Eurozone. 

Domestic Economy

We have another look at inflation at 8:30 AM ET, courtesy of the February Import and Exporting Price data. Shortly after that, at 9:15 AM ET, February Industrial Production will be released, and we will be parsing the figures for another look at the manufacturing economy. At 10 AM ET, the University of Michigan will publish the preliminary March reading on Consumer Sentiment, and the consensus view is it will be little changed compared to February’s 76.9 figure. 

Markets

In yet another case of mega-caps overpowering the broader trend, Technology (0.02%) was the only non-Energy (1.03%) sector to post a positive return. Gains in Microsoft (MSFT) and Apple (APPL) were enough to tip the sector positive despite chip makers filling 8 of the 10 top decliners in the sector. Real Estate (-1.41%) led markets lower, followed by Utilities, which fell 0.80%. Broad indexes reflected these results as the Dow, S&P 500 and Nasdaq Composite all fell between 0.29% and 0.25%, and the Russell 2000 reflected broader sentiment, closing 1.96% lower.

Shares of Lennar (LEN) fell 7.64% despite meeting to beating expectations after the company provided guidance that left some wanting, which prompted selling in Pultegroup (PHM), D.R Horton (DHI), Home Depot (HD), and Lowe’s (LOW). Here’s how the major market indicators stack up year-to-date: 

• Dow Jones Industrial Average: 3.23%
• S&P 500: 7.98%
• Nasdaq Composite: 7.44%
• Russell 2000: 0.20%
• Bitcoin (BTC-USD): 70.21%
• Ether (ETH-USD): 69.04%

Stocks to Watch

Buckle (BKE) and Jabil (JBL) are expected to release quarterly earnings before equities begin trading later this morning. 

Pre-market breadth is healthy today as 250 names in the S&P 500 have traded hands so far this morning with 147 gainers and 93 decliners. Adobe (ADBE) and Ulta Beauty (ULTA) are sitting atop the decliners leaderboard (more below on both) while Intuitive Surgical (ISRG), Micron Technology (MU), and Verisign (VRSN) are leading gainers this morning.

Adobe posted February quarter results that topped market forecasts and issued guidance for its May quarter that bookended consensus expectations. For the February quarter, Digital Media segment revenue was $3.82 billion, up 12% YoY, and Digital Experience segment revenue rose 10% YoY to $1.29 billion. Digital Experience subscription revenue was $1.16 billion, up 12% YoY. Adobe’s board approved a new stock repurchase authorization, granting the company authority to repurchase up to $25 billion in common stock through March 14, 2028.

Ulta Beauty reported better than expected January quarter EPS of $8.08 on revenue that rose 10% YoY to $3.55 billion, matching the consensus forecast. Comp sales for the quarter rose 2.5%, lapping comp sales of +15.6% in the year-ago period. For fiscal 2025, the company sees EPS of $26.20-$27.00 vs. the $27.03 consensus with revenue between $11.70-$11.80 billion compared to the $11.69 billion consensus. Underpinning that outlook, Ulta expects comps of +4%-5% on top of the +5.7% achieved in fiscal 2024. The company's board of directors approved a new share repurchase authorization of $2.0 billion, which replaces the prior authorization implemented in March 2022.

Nucor (NUE) issued downside guidance for its March quarter with EPS of $3.55-$3.65 compared to the $3.74 consensus. The company noted that the steel mills segment's earnings are expected to increase in the first quarter of 2024 due to higher average selling prices and volumes, particularly at sheet mills. Offsetting that, however, is the decline in the steel products segment due to lower average selling prices and decreased volumes. 

Uber (UBER) and Lyft (LYFT) will halt operations in Minneapolis starting May 1 after the city council voted to override Mayor Jacob Frey's veto of a pay hike ordinance, meaning ride-hailing services in the city will be required to raise driver wages to the local minimum of $15.57 per hour.

Indications are Samsung Electronics (SSNLF) will be awarded more than $6 billion to assist the chipmaker in expanding beyond an already announced project in Texas. This follows recent reports that Taiwan Semiconductor (TSM) will be the beneficiary of a $5 billion federal grant for a chipmaking center in Arizona.

Reports indicate United Airlines (UAL) is close to securing at least 36 Airbus (EADSY) jets as it seeks to replace delayed Boeing (BA) Max 10 orders.

After Today’s Market Close

Whew! The end of another trading week is at hand and that means no companies are expected to report quarterly results after equities stop trading today. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar. 

On the Horizon

Monday, March 18

• Eurozone: Inflation Rate, Consumer Price Index - February (Final)
• US: NAHB Housing Market Index - March 

Tuesday, March 19

• Eurozone: ZEW Economic Sentiment Index - March
• US: Housing Starts & Building Permits - February 

Wednesday, March 20

• UK: Inflation Rate, Producer Price Index - February
• Eurozone: Consumer Confidence (Flash) - March
• US: Weekly MBA Mortgage Applications 
• US: FOMC Rate Decision - 

Thursday, March 21

• Eurozone: New Car Registrations - February
• Eurozone: HCOB Flash Manufacturing & Services PMI - March
• UK: S&P Global Flash Manufacturing & Services PMI - March
• UK: Bank of England Interest Rate Decision
• US: Weekly Initial & Continuing Jobless Claims 
• US: S&P Global Flash Manufacturing & Services PMI - March 
• US: Existing Home Sales - February
• US: Leading Indicators - February 

Friday, March 22

• UK: Retail Sales - February

Thought for the Day

“You know, Hobbes, some days even my lucky rocket ship underpants don't help.” ―Bill Watterson

Disclosures

• Verisign (VRSN) is a constituent of the Foxberry Tematica Research Cybersecurity & Data Privacy Index
• Nvidia (NVDA) is a constituent of the Tematica BITA Digital Infrastructure & Connectivity Index
• Apple (AAPL), Microsoft (MSFT) are constituents of the Tematica Research Thematic Dividend All-Stars Index

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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