July 19, 2024

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Nasdaq slides after record high as investors wait for Nvidia earnings

Nasdaq slides after record high as investors wait for Nvidia earnings

US stocks opened mixed on Tuesday, as investors awaited Nvidia (NVDA) results and looked to retail earnings and Fedspeak for clues on the economy.

The S&P 500 (^GSPC) is down about 0.1% while the Dow Jones Industrial Average (^DJI) is hovering near the flat line. Meanwhile, the Nasdaq Composite (^IXIC) fell nearly 0.4% after ending Monday at a record high.

Investors are looking to companies for a signal in the absence of high-level economic data releases.

The focus is firmly on Nvidia’s highly anticipated earnings report on Wednesday, which is expected to spur a big move in its stock price and spur shares more broadly. A rise in the price of the artificial intelligence chip maker helped lift the Nasdaq Composite Index to a record high on Monday.

Meanwhile, investors are getting a flurry of quarterly reports from retailers to scrutinize the guidance of consumer spending and the health of the economy.

Lowe’s (Low) sales fell less than expected as cash-strapped Americans continued to spend on small repairs, while Macy’s (M) shares rose after the department store chain’s profits broke a low. AutoZone (AZO) and Urban Outfitters (URBN) are also on the agenda.

Investors are also listening closely to speeches from Federal Reserve officials, as a dearth of economic releases is starving discussion of interest rate cuts. Tuesday’s lineup includes Cleveland Fed President Christopher Waller, among others.

Read more: How does the labor market affect inflation?

In recent days, policymakers have emphasized the message that inflation may not be reliably calm enough to lower interest rates from their current historic highs. More insight — and a key test of optimism about cuts — will come in the release of the Fed’s meeting minutes on Wednesday in May.

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He lives5 updates

  • Lowe, Macy’s reports mixed quarterly results

    Investors digested a slew of retail gains on Tuesday as Lowe’s ( LOW ) shares fell in early trading while Macy’s ( M ) stock held the flat line.

    Lowe’s reported quarterly sales fell more than expected as Americans backed away from discretionary home improvement projects.

    The company also issued weak guidance for the current quarter, warning that it expects operating margins to remain under pressure. She reiterated her goals for the entire year. The stock value fell by about 3%.

    Meanwhile, Macy’s beat first-quarter expectations. As Yahoo Finance’s Brooke DiPalma reported:

    The department store chain reported revenue of $4.85 billion, down 2.7% from a year ago and slightly above Wall Street estimates of $4.81 billion. Adjusted earnings per share of $0.27 also beat the $0.14 expected.

    Same-store sales fell 1.2%, less than the 2.78% decline Wall Street expected as the new strategy took effect.

    “We think we’re gaining traction, and it’s still early days,” Adrian Mitchell, Macy’s CFO, told Yahoo Finance by phone. “We’re still going through changes in the stores from a staffing, merchandising and service standpoint. There are a number of changes that haven’t been implemented.” “Yet in store, there is more to come as we head into the summer season than in the latter half of this year.”

  • Nasdaq falls at the open

    US stocks opened mixed on Tuesday, as investors awaited Nvidia (NVDA) results and looked to retail earnings and Fedspeak for clues on the economy.

    The S&P 500 (^GSPC) is down about 0.1% while the Dow Jones Industrial Average (^DJI) is hovering near the flat line. Meanwhile, the Nasdaq Composite (^IXIC) fell about 0.4% after ending Monday at a record high.

  • Reading in the Macy’s neighborhood

    Macy’s (M) shares rose after its earnings report this morning, in which the company didn’t warn all year and said sales at its top 50 stores rose.

    In fact, the scope of the EPS directive has generally been left alone.

    This surprises me, given the first quarter’s challenges in the credit card space (sales down) and merchandise margins (also down).

    While investors choose to embrace the positives in Macy’s, I caution against overlooking the negatives. One is that sales are declining at hundreds of other Macy’s stores that will likely close over the next few years. You should evaluate the entire company, not just 50 stores as the company’s earnings release language would have one do.

    Furthermore, the company’s consumer commentary wasn’t exactly confidence-inspiring as to how the back-to-school shopping period will pan out.

    Yahoo Finance’s Brooke DiPalma has the earnings details here.

  • Good rating point on Nvidia from EvercoreISI

    An interesting phenomenon has appeared on Nvidia (NVDA).

    Stock for the AI ​​chip king may actually be cheap, EvercoreISI notes in a note this morning.

    “The combination of slowing revenue growth and increasing concerns about competition has pushed Nvidia’s relative P/E ratio to the lower end of the 10-year range, creating a scenario where earnings and upside are healthy. [on earnings Wednesday] “This will send the stock higher in the near term…and we expect a win and a healthy rally,” says analyst Mark Lepassis.

    His chart is below to put a finer point on it.

    I will point out that Nvidia stock isn’t actually very cheap from a pure valuation perspective. It trades at roughly 40 times its P/E ratio of estimated forward earnings…and the S&P 500 index trades at about 20.7 times.

    All of Nvidia’s key valuation metrics from Yahoo Finance can be found here.

    Nvidia stock takes a breather to expand valuation.Nvidia stock takes a breather to expand valuation.

    Nvidia stock takes a breather to expand valuation. (Evercore ISI)

  • Nvidia dominance in one chart

    Nvidia (NVDA) is having a rough week, and hasn’t even reported earnings (Wednesday evening).

    CEO Jensen Huang appeared to be impressed at the Dell (DELL) conference in Las Vegas yesterday, where Dell itself hinted at a possible move into CPUs by Nvidia.

    While you continue your homework on Nvidia before tomorrow’s report, a new chart from Goldman Sachs offers a perspective on the AI ​​chip darling.

    Nvidia dominance in one chart.Nvidia dominance in one chart.

    Nvidia dominance in one chart. (Goldman Sachs)