Stock Market Shows Mixed Signals Ahead of Earnings Season

The S&P 500 Index ($SPX) (SPY) closed up +0.01% on Wednesday, while the Dow Jones Industrials Index ($DOWI) (DIA) declined by -0.43%. The Nasdaq 100 Index ($IUXX) (QQQ) saw a modest gain of +0.22%. March E-mini S&P futures (ESH25) climbed +0.09%, and March E-mini Nasdaq futures (NQH25) increased by +0.31%.

On Wednesday, stock indexes enjoyed slight gains in anticipation of quarterly earnings results from Nvidia. Positive corporate developments bolstered the market, notably with Axon Enterprise surging over +15% after exceeding Q4 net sales expectations and projecting full-year revenue above consensus. Super Micro Computer saw a +12% increase following the filing of its 10-K report to ensure compliance and retain its Nasdaq listing. Furthermore, Intuit rose by more than +12% after posting better-than-expected Q2 net revenue.

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Support for stocks was also provided as House Republicans approved a budget blueprint on Tuesday night proposing deep cuts to various programs, including Medicaid. This plan aims to facilitate $4.5 trillion in tax cuts. It represents the initial stage in a reconciliation process that allows Republicans to bypass Senate Democrats regarding tax and spending legislation. However, the passage does not ensure an extension of the expiring 2017 Trump tax cuts. The Senate is expected to amend the House’s proposal, potentially creating new disagreements among House Republicans. The House approved the budget plan narrowly by a vote of 217 to 215, which would raise the U.S. debt limit by $4 trillion and help avert a potential default this summer. Congress has until December 31 to extend individual and business tax cuts enacted in 2017.

Copper prices (HGH25) soared by over +1% on Wednesday, reaching a 1-1/2 week high after President Trump signed an executive order for the Commerce Department to assess possible tariffs on U.S. copper imports.

Meanwhile, weakness was noted in health insurance stocks after the Wall Street Journal reported Republican Senator Chuck Grassley advocating for increased oversight of Medicare Advantage plans. Wednesday’s economic news was disappointing; January new home sales fell -10.5% month-over-month to 657,000, below the expected 680,000.

Adding to the pressure on stocks were hawkish comments from Atlanta Fed President Raphael Bostic, who indicated a need for a “restrictive posture” on interest rates to combat inflation.

In mortgage news, U.S. weekly MBA mortgage applications fell -1.2% for the week ending February 21. The purchase mortgage sub-index rose +0.2%, while the refinancing mortgage sub-index dropped -3.6%. The average 30-year fixed mortgage rate decreased by -5 basis points to 6.88% compared to the previous week’s 6.93%.

The economic calendar remains busy for the rest of the week. Thursday’s U.S. Q4 GDP report is forecasted to show a +2.3% increase (quarter-on-quarter annualized) alongside a +4.1% rise in personal consumption. On Friday, the January PCE price index report, the Fed’s preferred inflation gauge, is expected to decline slightly to +2.5% year-on-year from December’s +2.6%. The core index is predicted to ease to +2.6% yearly from +2.8% in December. Such expectations would keep these measures above their respective lows recorded in 2024 of +2.1% and +2.6%, significantly exceeding the Fed’s +2% inflation target.

Currently, markets are pricing the likelihood of a -25 basis point rate cut at next month’s FOMC meeting on March 18-19 at just 3%.

International markets also displayed mixed performances on Wednesday. The Euro Stoxx 50 closed up +1.47%, while China’s Shanghai Composite Index gained +1.02%. Conversely, Japan’s Nikkei 225 fell to a four-month low, ending the day down -0.25%.

Interest Rates

March 10-year Treasury notes (ZNH25) closed up +10.5 ticks on Wednesday. The 10-year T-note yield declined -4.4 basis points to 4.251%. T-notes experienced a rally, reaching a 2-1/2 month high as the yield fell to a 2-1/2 month low of 4.245%. This surge followed a rally in European government bonds. Additionally, bullish indicators from U.S. economic data, particularly the unexpected downturn in new home sales, supported T-note prices, while inflation expectations fell, with the 10-year breakeven inflation rate dropping to a 7-week low of 2.359%. The strong demand for the Treasury’s $44 billion auction of 7-year T-notes contributed to T-note gains, evidenced by a bid-to-cover ratio of 2.64, surpassing the 10-auction average of 2.61.

Initially, T-notes faced downward pressure after House Republicans passed a budget outline proposing tax cuts, which are anticipated to keep the U.S. budget deficit elevated. Supply pressures also influenced T-notes, with the Treasury selling $28 billion in floating-rate 2-year T-notes and $44 billion in 7-year T-notes on the same day.

European bond yields declined on Wednesday, with the 10-year German bund yield falling to a 1-1/2 week low of 2.421%, finishing down -2.5 basis points at 2.433%. Similarly, the 10-year UK gilt yield dropped to a 1-1/2 week low of 4.470% and concluded down -0.6 basis points at 4.502%.

The German March GfK consumer confidence index unexpectedly dipped -2.1 to an 11-month low of -24.7, deviating from expectations of an increase to -21.6.

Swaps indicate a 100% chance of a -25 basis point rate cut by the ECB at the meeting scheduled for March 6.

US Stock Movers

Chip stocks rebounded on Wednesday, partially recovering from Tuesday’s sharp declines. Broadcom (AVGO) rose over +5%, while Micron Technology (MU) gained more than +4%. Nvidia (NVDA) increased by more than +3%, leading the Dow gainers ahead of its earnings report following Wednesday’s close. Additionally, Marvell Technology (MRVL), Intel (INTC), and ASML Holding NV (ASML) saw gains of more than +2%, while Applied Materials (AMAT), KLA Corp (KLAC), and Lam Research (LRCX) closed up by over +1%.

Axon Enterprise (AXON) led the S&P 500 and Nasdaq 100 with a remarkable +15% gain after reporting Q4 net sales of $575.1 million, surpassing the consensus estimate of $566.6 million, and projecting full-year revenue in the range of $2.55 billion to $2.65 billion, exceeding the consensus midpoint of $2.56 billion.

Super Micro Computer (SMCI) rose by more than +12% upon the filing of its 10-K report for the period ending June 30, meeting a compliance deadline to maintain its Nasdaq listing.

Intuit (INTU) experienced a +12% increase after reporting Q2 net revenue of $3.96 billion, surpassing the consensus of $3.83 billion.

ZoomInfo Technologies (ZI) surged by over +23% after announcing Q4 adjusted earnings per share of 26 cents, exceeding the consensus of 23 cents, and forecasting full-year adjusted EPS of 95 cents to 97 cents, stronger than the consensus average of 92 cents. Workday Inc (WDAY) also saw significant movement, contributing to the overall activity in the markets.

Stock Market Movements: Key Earnings and Financial Updates

Stocks saw varied performances following recent earnings reports and market news. Notable movements included a surge in shares for several companies, while others faced significant declines.

Winners of the Day

Rising more than +6%, a company reported Q4 revenue of $2.21 billion, which surpassed the consensus estimate of $2.18 billion.

General Motors (GM) experienced a boost of over +3% after announcing plans to increase its quarterly dividend and enhance its share buyback program to $6 billion.

Freeport-McMoRan (FCX) also closed up more than +3%. This increase followed a jump of over +2% in copper prices, reaching a 1-1/2 week high. This rise came after President Trump signed an executive order that may introduce tariffs on U.S. copper imports.

Declining Stocks

On the downside, Grocery Outlet (GO) fell more than -30% after projecting full-year adjusted EPS between 70 cents and 75 cents. This estimate was significantly below the consensus forecast of 95 cents.

Health insurance stocks faced pressure as well. Following a Wall Street Journal report that Republican Senator Grassley is advocating for stronger oversight of Medicare Advantage plans, Centene (CNC) dropped over -7%, leading the declines in the S&P 500. Similarly, Molina Healthcare (MOH) fell more than -6%, while Universal Health Services (UHS) was down over -4%. Other health care firms, including HCA Healthcare (HCA) and Elevance Health (ELV), closed down more than -3%, while Cigna Group (CI) declined over -2%.

Keysight Technologies (KEYS) reported Q1 orders of $1.26 billion, falling short of the consensus estimate of $1.30 billion, leading to a drop of more than -6% in its share price.

Significant Losses in the Nasdaq 100

AppLovin (APP) declined over -12%, becoming the biggest loser in the Nasdaq 100. This drop followed negative short reports published by Culper Research and Fuzzy Panda.

Maplebear (CART) also saw a decrease of over -12% after predicting Q1 adjusted EBITDA between $220 million and $230 million, which was lower than the expected $237.1 million.

Zeta Global Holdings (ZETA) closed down more than -13% after it projected Q1 revenue to be between $253 million and $255 million, below the consensus of $256.1 million. In a similar vein, Extra Space Storage (EXR) fell over -4% after forecasting 2025 core FFO per share between $8.00 and $8.30, with the midpoint being lower than the consensus estimate of $8.30. Henry Schein (HSIC) also dropped by over -4% as it reported Q4 net sales of $3.19 billion, missing the consensus of $3.28 billion.

Upcoming Earnings Reports

Earnings Reports (2/27/2025)

A list of companies set to report their earnings includes AES Corp/The (AES), Autodesk Inc (ADSK), Dell Technologies Inc (DELL), Edison International (EIX), EOG Resources Inc (EOG), Erie Indemnity Co (ERIE), Evergy Inc (EVRG), Hormel Foods Corp (HRL), HP Inc (HPQ), J M Smucker Co/The (SJM), Monster Beverage Corp (MNST), Mosaic Co/The (MOS), NetApp Inc (NTAP), Norwegian Cruise Line Holdings (NCLH), Solventum Corp (SOLV), Teleflex Inc (TFX), Viatris Inc (VTRS), Vistra Corp (VST), and Warner Bros Discovery Inc (WBD).

On the date of publication, Rich Asplund did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more details, please view the Barchart Disclosure Policy here.

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