Daily Markets: Investors Digest Earnings, Fed Speeches

Today’s Big Picture

Asian markets closed today’s trading up across the board, with the exception of India’s Sensex which closed down 0.18%, and Japan’s Nikkei which fell 0.83%. China’s Shanghai Composite gained 0.06%, Taiwan’s TAIEX closed ahead 0.20% while Hong Kong’s Hang Seng and South Korea’s KOSPI finished trading up 0.30% and 0.53%, respectively. By mid-day trading, European equity indices are down and U.S. futures point to a down market open later this morning.

Amid a quiet day of economic data, the sea of earnings from yesterday and today will give investors a lot to think about over the upcoming holiday weekend, and in the meantime, continue to keep an eye on Ukraine-Russia developments. Following yesterday’s release of the Fed’s January monetary policy meeting minutes, odds are the investment community will be listening closely to the Fed head speeches given today and tomorrow, looking for further clues as to what the Fed is likely to do at their next meeting in March. Given the Fed’s statement about the upcoming “significant” reduction in the size of the balance sheet, investors have no choice but to wait to see just how this reduction will unfold.

Data Download

International Economy

Today is a relatively light day on the international economic release front. China announced the January YoY change in Foreign Direct Investment at 11.60% which fell 3.30% from the previously reported 14.90%. This change is thought to be driven by lower demand, supply shocks and overall weakening expectations as manufacturers start to consider relocating production closer to installed user bases in reaction to supply chain woes of the past year.

Domestic Economy

Before the market open, we will see the latest January Housing Starts figures which are expected to come in lower at 1,685 thousand compared to the previous figure of 1,702 thousand. This expected drop has been described as more of a return to “normal” as December starts received a boost from an unexpected increase in multifamily housing projects.

We will also see the latest weekly figures on Initial Unemployment Claims which are expected to fall to 220,000 from the previous 223,000 figure which itself was a pleasant surprise to the downside. The overall decline of omicron and continued loosening of restrictions is thought to be playing into these figures as we begin to transition back to "normal," whatever that looks like. 

Markets

The S&P 500 increased eked a modest gain yesterday as the market reacted positively to the Fed’s January FOMC minutes. The Nasdaq Composite lost 0.1% after being down 1.5% intraday, the Dow Jones Industrial Average lost 0.2% and the Russell 2000 gained 0.1%. Year-to-date, here are how the major market indicators stack up:

• Dow Jones Industrial Average: -3.9%
• S&P 500: -6.1%
• Nasdaq Composite: -9.7% 
• Russell 2000: -7.4%
• Bitcoin (BTC-USD): -5.0%
• Ethereum (ETH-USD): -15.0%

Stocks to Watch

Before trading kicks off for US-listed equities, AutoNation (AN), Fiverr (FVRR), Genuine Parts (GPC), Interdigital Communications (IDCC), Pool (POOL), Palantir Technologies (PLTR), Sanderson Farms (SAFM), SolarWinds (SWI), Tower Semiconductor (TSEM), US Foods (USFD), and Walmart (WMT) will report their latest quarterly results. 

Despite a challenging supply environment, semiconductor capital equipment company Applied Materials (AMAT) put together a better than expected quarterly earnings report that beat on both the top and bottom line. The company also guided the current quarter to EPS of $1.75-2.05 vs. the $1.96 consensus with revenue of $6.05-6.65 billion vs. the $6.44 billion consensus. Demand is very strong and continues to grow as evidenced by the company’s backlog that increased by more than $1.3 billion to a record $8 billion during the quarter. Management commented it is already close to being sold out for the year, giving it a positive growth outlook for 2023.

Nvidia (NVDA) topped consensus forecasts for its January quarter with EPS of $1.32 on revenue of $7.64 billion vs. the $1.22 and $7.43 billion consensus. Revenue gains were had across all the company’s business sectors, including gaming and data centers. The company shared its Networking products revenue was still constrained by supply shortages, but it anticipates improving capacity in coming quarters. For the current quarter, Nvidia is calling for significantly higher than consensus revenue between $7.93-$8.26 billion vs. the $7.28 billion consensus. 

December quarter results at Cisco Systems (CSCO) topped expectations with EPS of $0.84 vs. the $0.81 consensus. Revenue for the quarter rose 6.4% YoY to $12.72 billion, also topping the $12.67 billion consensus. For 2022, the company sees EPS of $3.41-3.46 vs. the $3.42 consensus and a narrower revenue range than previously expected - roughly $52.6-53.1 billion vs. the $52.75 billion consensus. The company shared that while demand continues to outpace supply, supply constraints remain a near-term headwind.

Despite reporting a larger than expected bottom line loss for the December quarter, DoorDash’s (DASH) revenue for the quarter jumped 34% YoY to $1.3 billion, edging out the $1.28 billion consensus. Exiting the quarter, the company had monthly active users (MAUs) of over 25 million, up 22% YoY. The company shared that omicron did impact its December quarter but that impact was muted in January. For 2022, DoorDash sees its Marketplace GOV to be in a range of $48-$50 billion, with 2022 Adjusted EBITDA in a range of $0-$500 million.

Mastercard (MA) completed a successful proof of concept coupling its AI modeling technology with Milliman Payment Integrity solutions, sharing it found $239 million in suspected healthcare fraud, waste, and abuse.

IPOs

There are no IPO offerings expected to price this week. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

Air Lease (AL), AMN Healthcare (AMN), Cambium Networks (CMBM), Cognex (CGNX), Digital Realty Trust (DLR), Dropbox (DBX), Realogy (RLGY), Redfin (RDFN), Roku (ROKU), Shake Shack (SHAK), and Sunrun (RUN) will be among the companies reporting their latest quarterly results. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar. 

On the Horizon

Friday, Feb. 18

• Japan: CPI - January
• UK: Retail Sales – January
• Eurozone: Consumer Confidence (Preliminary) - February
• US: Existing Home Sales – January 
• US: Leading Indicators – January 

Thought for the Day

“Life is the sum of all your choices.” ~ Albert Camus

Disclosures

• SolarWinds (SWI) is a constituent of the Foxberry Tematica Research Cybersecurity & Data Privacy Index
• Sunrun (RUN), Sanderson Farms (SAFM) are constituents of the Tematica BITA Cleaner Living Index
• Sunrun (RUN) is a constituent of the Tematica BITA Cleaner Living Sustainability Screened Index
• Cambium Networks (CMBM), Cisco Systems (CSCO), Digital Realty Trust (DLR) are constituents of the Tematica BITA Digital Infrastructure & Connectivity Index
• Mastercard (MA) is a constituent of the Tematica BITA Digital Payments & Fintech Sustainability Screened Index
• Walmart (WMT) is a constituent 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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