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Daily Markets Update: Nvidia Earnings Report Skyrockets

Market Movement Overview

Asia-Pacific equity markets surged today, with Australia’s ASX All Ordinaries edging up by 0.07% and South Korea’s KOSPI soaring by 0.41%. Riding this upward wave, Nvidia’s earnings report provided additional propulsion, causing a ripple effect that boosted the markets further. China and Hong Kong’s market growth received an extra push from regulators’ ban on institutional shareholders selling around the open or close, resulting in China’s Shanghai Composite and Hong Kong’s Hang Seng closing 1.27% and 1.45% higher, respectively. Japan’s market mimicked a scene from the late 80s, with the Nikkei rising by an incredible 2.19% to set a new all-time high. Over in Europe, markets are currently registering significant gains, and U.S. equity futures are pointing towards an unexpectedly robust opening.

Today in the U.S., investors are eagerly awaiting S&P Global’s Flash February Manufacturing and Services PMIs. These figures will offer a valuable initial insight into February’s economic landscape and will be thoroughly analyzed to assess economic velocity, job creation, and the possibility of February inflation replicating January’s unexpected surge. Other indicators to watch are the Atlanta Fed’s GDPNow Model, currently at 2.9% for the current quarter, and five scheduled speeches by Fed officials, creating a dynamic of economic optimism versus anticipated timing for rate cuts – a topic likely to dominate today’s discussions.

Global Economic Indicators

International Economy

In the international economic sphere, the Flash February reading for the au Jibun Bank Japan Manufacturing PMI unexpectedly fell to 47.2, missing market expectations, while the Flash Services PMI declined to 52.5 in February from the previous month’s four-month high of 53.1, amid softer rises in output. Preliminary reports also noted a decrease in the HCOB Eurozone Manufacturing PMI to 46.1 in February from 46.6 in the previous month, missing market expectations. However, the Flash reading for the HCOB Flash Eurozone Services PMI jumped to 50 in February, its highest in seven months, showing acceleration in net hiring and a notable increase in both input and output cost inflation. Notably, the Euro Area inflation rate remained steady at 2.8% in January, slightly above the European Central Bank’s target of 2.0%. Meanwhile, the Flash UK Flash Manufacturing PMI edged up to 47.1 in February from 47 in January, though falling below market forecasts of 47.5, while the Flash Services PMI held steady at 54.3 in February, exceeding the expected 54.1.

Domestic Economy

Before S&P publishes its Flash February PMI data at 9:45 AM ET, the weekly jobless claims figures will be released. Following the PMIs, January Existing Home Sales figures will be disclosed, with market expectations hoping for a rise to 3.97 million homes, up from 3.78 million in December.

Financial Markets

Yesterday witnessed an overall positive day in the financial markets, with sectors like Energy (1.88%) and Utilities (1.32%) leading the way, albeit dragged down by the Technology sector (-0.63%) in anticipation of pre-earnings releases from Nvidia and Communication Services (-0.11%) pressured by Meta Platforms. Major indicators for the year-to-date have demonstrated varying movements:

  • Dow Jones Industrial Average: 2.45%
  • S&P 500: 4.44%
  • Nasdaq Composite: 3.79%
  • Russell 2000: -1.59%
  • Bitcoin (BTC-USD): 23.56%
  • Ether (ETH-USD): 29.58%

Stocks Garnering Attention

Short-term interests are piqued by the imminent quarterly earnings from Builders FirstSource (BLDR), Cars.com (CARS), Fiverr (FVRR), Keurig Dr Pepper (KDP), Moderna (MRNA), and Planet Fitness (PLNT) before equities begin trading this morning. Pre-market trends indicate a robust breadth today, with 315 names in the S&P 500 having traded hands so far, including 247 gainers and 68 decliners. Notably, Nvidia is spearheading the gainer board, set to open with over 14% gains, while Advanced Micro Devices (AMD) is also surging, and the cruise lines sector represented by Royal Caribbean (RCL) and Carnival Corp (CCL) potentially poised to open over 5% higher.

Market Movers: Nvidia, Rivian, Lucid Group, and More

Actionable Trade Ideas

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The stock market is akin to a mighty river, at times turbulent and at times calm, but always in motion. As investors navigate these ever-changing waters, certain equities have sparked intense interest and speculation. Companies like Nvidia, Rivian Automotive, Lucid Group, and Etsy have each experienced unique market pressures and movements following their recent earnings releases.

Nvidia’s Soaring Performance

Nvidia recently reported an extraordinary performance in the January quarter. The tech giant’s earnings per share (EPS) of $5.16 shattered market forecasts of $4.59, while its revenue catapulted to $22.1 billion, marking a staggering 265.3% year-over-year surge. Notably, the company’s Data Center revenue reached a record high of $18.4 billion, representing a remarkable 409% year-over-year increase. Although Gaming revenue remained flat compared to the previous quarter, it exhibited substantial growth of 56% year-over-year. Furthermore, Nvidia’s forecast for the current April quarter predicts a top-line range of $23.52-$24.48 billion, reflecting the company’s confidence in sustained growth across its various divisions.

Rivian’s Mixed Fortunes

Following a mixed December quarter, Rivian Automotive experienced a dip in its share price during aftermarket trading. While the company exceeded revenue expectations by achieving a 98.3% year-over-year increase to $1.31 billion, its bottom line fell short of consensus forecasts by $0.01 per share. Despite the stride in production and deliveries in 2023, with 57,232 vehicles manufactured and 50,122 delivered, the company’s projection for 2024 anticipates producing 57,000 vehicles with an adjusted EBITDA of -$2.7 billion. Additionally, Rivian disclosed a reduction of approximately 10% in its salaried workforce, signaling underlying volatility within the organization.

Lucid Group’s Revenue Decline

Lucid Group encountered a setback as its most recent quarter witnessed a substantial decline in revenue, plummeting by 39% year-over-year to $157.2 million. The company’s delivery of 1,734 vehicles during the quarter echoed this decline. Looking ahead to 2024, Lucid aims to rebound by targeting the production of 9,000 vehicles, signifying an ambitious effort to regain lost ground and reignite investor enthusiasm.

Etsy’s Disappointing Guidance

Etsy faced a downturn as its mixed December quarter results and weaker-than-anticipated guidance for the current quarter provoked unsettling market reactions. The company’s forecast of a potential decline in gross merchandise sales (GMS) on a year-over-year basis has added to investor concerns, with the possibility of a mid-single-digit GMS decline should trends fail to improve as anticipated.

Social media powerhouse Reddit struck a pivotal deal with Google’s parent company, Alphabet, to provide its content for training the tech giant’s artificial intelligence models, illuminating the continuing convergence of social media and advanced technology.

In the energy sector, Chord Energy and Enerplus agreed on a significant cash and stock merger amounting to approximately $11 billion, including debt. This momentous merger is poised to create a Williston Basin-focused exploration and production company with a strategic blend of assets and capabilities.

Upcoming Catalysts

As investors gear up for the week ahead, they should mark their calendars for key economic events and data releases. From new home sales in the US to manufacturing PMI figures from various global markets, the upcoming week promises to be pivotal in shaping investor sentiment and market dynamics.

Final Reflection

To conclude, the stock market’s perpetual ebb and flow encapsulates the myriad forces that shape the investment landscape. As investors remain vigilant in navigating these shifting tides, it is essential to stay abreast of market-moving developments and forthcoming catalysts that could drive significant shifts in equity valuations.

Thought for the Day

“Mimicking the herd invites regression to the mean.” ~Charlie Munger

Disclosures

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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