Equity Indexes Wrap: Tech Stocks Tumble, Led by AI Chip Leaders; Walmart, Home Depot Gain on Earnings
12 hr 18 min ago
The Dow
Walmart (WMT) jumped 3.3% after beating Wall Street’s estimates with its fourth-quarter earnings and announcing the $2.3 billion acquisition of smart TV maker Vizio (VZIO).
Coca-Cola (KO) rose 2.3% as investors piled into the relative safety of consumer staples stocks and dividend aristocrats. Procter & Gamble (PG) added 0.7%.
Home Depot (HD) inched up 0.1%, recovering from early losses after the home retailer forecast comparable store sales would decline 1% in 2024.
Caterpillar (CAT) fell 2.6% after ISI Evercore downgraded the stock to “hold” from “buy,” citing the stock’s more than 30% rally in the last year.
Tech stocks tumbled, led by International Business Machines (IBM), down 2.2%, and Salesforce (CRM), down 1.1%.
The S&P 500
Discover Financial Services (DFS) jumped 12.6% after Capital One (COF) said it would buy the credit card and payments provider for $35.3 billion. Fellow credit card provider Synchrony Financial (SYF) rose 2.4% while Capital One ticked up 0.1%.
Medtronic (MDT) gained 1.7% after it reported better-than-expected sales of its heart and diabetes devices in the fourth quarter. Competitor Abbott Laboratories (ABT) rose 2.3%.
Expeditors International (EXPD) led the index lower, falling 6.9% after missing earnings estimates in the fourth quarter amid low shipping volumes and soft prices. Freight and logistics peer J.B. Hunt (JBHT) lost 5.7%.
Mastercard (MA) fell 3.5% as investors considered the increased competition it could face after Capital One and Discover’s tie-up. Fellow payments giant Visa (V) slipped 1.2%.
The Nasdaq 100
GlobalFoundries (GFS) rose 2.1% after the chip fabricator received a $1.5 billion grant from the White House to expand and add to manufacturing capacity in New York and Vermont. Intel (INTC), also a contender for billions of dollars of CHIPS Act incentives, rose 2.3%.
The Trade Desk (TTD) fell 7.2% as investors took profits following a 17.5% jump last Friday on a better-than-expected earnings report.
Chip stocks, some of the year’s best-performing stocks, lost their momentum. Nvidia (NVDA) fell 4.4% while competitor Advanced Micro Devices (AMD) slid 4.7% and semiconductor manufacturing equipment maker ASML Holding (ASML) lost 2.1%.
Palo Alto Networks (PANW) slipped 0.1% ahead of its earnings report after the bell.
What You Need to Know Ahead of Nvidia’s Earnings Report on Wednesday
12 hr 39 min ago
Nvidia (NVDA) is set to announce its fourth-quarter earnings for the 2024 fiscal year after the bell on Wednesday, with analysts expecting significant profit and revenue gains from the chipmaker as it benefits from the artificial intelligence (AI) boom.
Analysts anticipate Nvidia’s revenue could reach $20.38 billion for the final quarter of fiscal 2024, more than triple the chipmaker’s revenue in the same period a year ago, according to estimates compiled by Visible Alpha.
Net income is expected to be $10.4 billion, up from $1.41 billion in the fiscal fourth quarter of 2023, while earnings per share (EPS) is projected at $4.18, compared to 57 cents in the same period a year earlier.
See here for more on what to expect from Nvidia tomorrow.
Medtronic Beats Estimates and Boosts Outlook on Heart, Diabetes Device Sales
13 hr 19 min ago
Shares of Medtronic PLC (MDT) gained Tuesday after the medical technology firm posted better-than-expected results and raised its guidance on increased demand for its heart and diabetes devices.
The company reported third-quarter fiscal 2024 earnings per share (EPS) of $1.30, with revenue rising 4.7% to $8.09 billion. Both were above forecasts.
Sales at its heart devices unit, its biggest revenue source, were up 6.1% to $2.93 billion. Diabetes unit sales jumped 12.3% to $640 million. Those also exceeded estimates.
Medtronic now anticipates full-year EPS in a range of $5.19 to $5.21, up from its earlier outlook of $5.13 to $5.19.
Medtronic shares were 1.3% higher at $85.20 Tuesday afternoon.
Expeditors International Leads S&P 500 Lower as Sales, Earnings Disappoint
13 hr 57 min ago
Shares of Expeditors International of Washington (EXPD) tumbled Tuesday after the freight and logistics company reported sales and earnings declined in the fourth quarter of 2023 as economic and geopolitical uncertainty weighed on business.
Expeditors International reported net earnings of $159 million, or $1.09 a share, a 21% decrease from the year-ago quarter. Revenue slumped 34% to $2.3 billion, weighed on by weak demand and prices.
“While ocean and air markets have been recovering from the massive disruptions brought on by the global Covid-19 pandemic, we continue to face further market uncertainty due to the current conflicts in the Middle East and on the Red Sea,” said Chief Executive Officer Jeffrey Musser.
The company said it was working to further reduce expenses, which it did throughout 2023 by trimming its headcount. “Even though compensation, our largest and most variable expense, is 20% lower than the same quarter a year ago, just about everything else is more expensive,” said Chief Financial Officer Bradley Powell. “We continue to be focused on further aligning headcount and overhead expenses with lower levels of transactions and volumes.”
Expeditors shares were down more than 7% Tuesday afternoon, making it the worst-performing stock in the S&P 500. With Tuesday’s decline, the stock has gained about 3% in the past 12 months.
Home Depot Sees Continued Headwinds as High Interest Rates Hurt Big-Ticket Spending
14 hr 40 min ago
Home Depot Inc. (HD) on Tuesday reported declines in sales and earnings for its fiscal 2023 fourth quarter as customers cut back on home improvement spending in a high interest-rate environment.
The home improvement retailer said its revenue for the quarter ending Jan. 28 fell 2.9% from the year-earlier period to $34.79 billion, while diluted earnings per share fell 14.5% to $2.82. The top-line and bottom-line numbers beat analysts’ expectations, but the company’s forecast of a 1% decline in comparable store sales fell short of estimates.
Chief Financial Officer Richard McPhail, speaking on a call with analysts, said that while there are signs the U.S. economy is normalizing after a period of interest rate hikes, the home improvement market still faces headwinds.
In the fiscal fourth quarter, big-ticket transactions—defined as those over $1,000—were down 6.9% from the year-ago period, Billy Blastek, Home Depot’s executive vice president for merchandising, said on the call.
Home Depot shares were up 0.1% at $362.83 Tuesday after falling as low as $354.56 in the opening minutes of trading. The stock has gained about 20% over the past year.
Barclays Stock Soars as Bank Shakes Up Organization, Plans Cost Cuts and Stock Buybacks
16 hr 13 min ago
American Depositary Receipts (ADRs) of Barclays Plc (BCS) soared on Tuesday as the U.K.-based bank announced a major restructuring as well as plans to slash costs and return billions to shareholders.
Describing it as a simplification of its business, organization, and operations, the company said it would divide itself into five separate divisions: A UK Bank focused on personal and business banking and credit cards; a private bank and wealth management arm; a U.S. consumer bank; a U.K. corporate bank; and an investment bank.
Barclays explained that it plans to cut expenses by 2 billion pounds ($2.53 billion) by 2026, and to buy back at least 10 billion pounds ($12.65 billion) worth of shares over that time.
In the fourth quarter, the bank reported a loss of 111 million pounds ($140 million). Group revenue fell 3% to 5.6 billion pounds ($7.1 billion).
Barclays ADRs were up 11% at $8.29 midday Tuesday, trading at their highest level since last July.
Investors Shun High-Flying Chip Stocks for Safety
16 hr 43 min ago
Chip stocks, some of the year’s best performers, turned sharply lower Tuesday as investors flocked to safety.
Nvidia (NVDA), the S&P 500’s best-performing stock heading into Tuesday, fell more than 5% Tuesday, putting the stock on track to have one of its worst days in a year. The AI chip leader will report quarterly earnings after markets close on Wednesday.
Shares of Advanced Micro Devices (AMD), one of Nvidia’s leading competitors in the market for advanced AI semiconductors, also tumbled more than 5%.
Semiconductor manufacturing equipment maker Applied Materials (AMAT), which jumped more than 6% last Friday after offering a better-than-expected current-quarter forecast, slid more than 5%, giving back nearly all of those gains.
Meanwhile, consumer staples—the equity market’s safe havens—advanced, led by Walmart (WMT), up more than 3%, and Coca-Cola (KO), up nearly 2%. Other safe havens like gold and Treasurys also rose.
GlobalFoundries Stock Up After $1.5B Grant to Boost Chip Production
17 hr 27 min ago
GlobalFoundries (GFS) avoided a widespread tech sell-off Tuesday after the chip manufacturer announced on Monday that it had secured a $1.5 billion subsidy from the U.S. government—the first sizable award from a $39 billion fund established in 2022 as part of the U.S. CHIPS and Science Act.
The chipmaker, which recently opened a $4 billion plant in Singapore, plans to use the grant to build a new semiconductor production facility in Malta, New York, and scale its existing operations in Northern Vermont.
The company will also gain access to $1.6 billion in available loans, with the total funding expected to generate $12.5 billion in potential investment and around 10,500 construction and manufacturing jobs across both states, the U.S. Department of Commerce (DOC) said in a statement.
Source: TradingView.com.
GlobalFoundries shares have oscillated within an orderly descending channel since early April last year. Although the price sits at the midpoint of the pattern, volume has increased in recent weeks, indicating more active participation in the stock. If the shares move higher in the days ahead, monitor the channel’s top trendline, currently around $60.75, as a potential area of resistance. Conversely, keep an eye on buyers’ ability to defend support near the pattern’s lower trendline around $46.20.
The stock was up 1.6% at $54.22 Tuesday morning.
Discover Financial Leads the S&P 500 on Acquisition by Capital One
17 hr 59 min ago
Discover Financial Services (DFS) stock jumped as much as 12.3%, its biggest intraday gain since 2020, on Tuesday morning after Capital One Financial Corp. (COF) said it would acquire the credit card and payments provider in an all-stock transaction valued at $35.3 billion.
According to the terms of the deal, Discover shareholders will receive 1.0192 Capital One shares for each Discover share, representing a 26.6% premium to Discover’s closing share price on Friday. When the transaction closes, Capital One shareholders will own about 60% of the combined company, while Discover shareholders will own the remainder, according to a press release.
Discover had a market capitalization of $27.6 billion at the close of trading on Friday, while Capital One’s market value stood at $52.2 billion. U.S. financial markets were closed for the Presidents’ Day holiday on Monday.
Capital One, which expects the deal to close in late 2024 or early next year pending shareholder and regulatory approval, said the combination of the two companies will generate $2.7 billion in pre-tax synergies and add at least 15% to adjusted earnings per share in 2027.
Discover was the best-performing stock in the S&P 500 early Tuesday. Capital One stock plummeted 5% at the open before paring its losses to trade down about 1% nearly an hour into Tuesday’s trading session.
Walmart Stock Rises After Q4 Earnings, Vizio Buy
18 hr 40 min ago
Walmart Inc. (WMT) reported better-than-forecast results for its fiscal fourth quarter, as the big-box retailer benefited from consumers watching their spending amid still elevated inflation levels.
Shares in the company, which also announced a $2.3 billion deal to buy smart-television maker Vizio (VZIO), rose more than 5% in early trading Tuesday. Vizio shares jumped 15% higher before the bell.
Walmart’s net income fell to $5.49 billion, or $1.80 per share, above analyst projections of $4.36 billion or $1.61 per share. Sales rose 6% to $173.39 billion for the three months ending January—when the company’s fiscal year renews. The company said it expects consolidated net sales to rise 4% to 5% in its fiscal first quarter.
Walmart is buying Vizio for $11.50 per share in cash, to expand its advertising business. The acquisition will provide the retailer with “a profitable advertising business that is rapidly scaling,” Seth Dallaire, executive vice president and chief revenue officer of Walmart U.S. said in a statement.
Stocks Making the Biggest Moves Premarket
19 hr 10 min ago
Gains:
- Vizio Holding Corp. (VZIO): Shares of the smart TV maker jumped 15% after Walmart said it would buy the company for $2.3 billion to expand its advertising business.
- Discover Financial Services (DFS): Shares surged more than 13% after Capital One Financial (COF) on Monday said it would buy the credit card and payments provider in an all-stock deal valued at $35.3 billion. Capital One stock fell more than 4% in early trading.
- GlobalFoundries Inc. (GFS): Shares rose more than 7% after the Biden Administration said it would award the semiconductor maker $1.5 billion of CHIPS Act funding to expand its fabrication capacities in New York and Vermont.
- Walmart Inc. (WMT): Shares of the discount retailer rose 4% after reporting earnings of $1.80 per share on $173.39 billion in revenue in the fourth quarter, beating analyst estimates.
Losses:
- Rio Tinto Plc (RIO): Shares of the mining company fell 3% as the price of iron ore slumped to a three-month low amid concerns about sluggish demand from China’s ailing property sector. Peers BHP Group (BHP) and Vale S.A. (VALE) were also lower premarket.
- Home Depot Inc. (HD): Shares of the home improvement retailer slipped 2% after its full-year sales forecast fell short of analyst estimates, overshadowing its better-than-feared fourth-quarter sales and earnings.
Stock Futures Fall Following Retailer Earnings
19 hr 51 min ago
Futures contracts connected to the Dow Jones Industrial Average were down 0.3% in premarket trading on Tuesday.
S&P 500 futures slipped 0.3%.
Nasdaq 100 futures traded 0.4% lower about an hour before markets opened.
