Today’s Big Picture
Asia-Pacific equity markets finished the day up across the board. Japan’s Nikkei rose 0.23%, Taiwan’s TAIEX gained 0.47%, China’s Shanghai Composite added 0.61%, Hong Kong’s Hang Seng advanced 0.76%, and Australia’s ASX All Ordinaries was up 1.01%. South Korea’s KOSPI closed 1.24% higher as Health Technology, Energy Minerals, and Distribution Services names led that market. India’s markets are closed as the country celebrates Maha Shivratri Day, commemorating the wedding of the deities Shiva and Parvati. Major European markets are up across the board except for Germany in midday trading and U.S. equity futures are pointing to a lower open.
The moment the market has been waiting for is upon us this morning - the February Employment Report. U.S. job growth grew 275,000 for the month of February, exceeding expectations of almost 200,000. However, the unemployment rate rose to 3.9%, up from 3.7% in January. Average hourly earnings rose 0.1% for the month, versus expectations of 0.2%, and year-on-year earnings rose 4.3%, in line with expectations. In the recent past, stronger-than-expected figures would have facilitated a market sell-off, but the market narrative has changed, especially with Fed Chair Powell making rate cuts a “when” not “if” for 2024.
Data Download
International Economy
The gauge for Japan’s service sector rose to 51.3 in February from 50.2 in the previous month. The measure for household budget trends increased to 50.9 compared to 49.5 in January, mainly due to a rise in services and housing-related goods. Additionally, the gauge for corporate trends went up to 52.0 from 50.9 in January, driven by an increase in non-manufacturing industries.
Reports indicate China is poised to raise over $27 billion for its largest chip fund yet as it looks to develop advanced technologies and counter US curbs aimed at restricting China's access to advanced chips and equipment.
Final estimates confirmed the Eurozone economy expanded 0.1% YoY in the last quarter of 2023. The number of employed persons in the Euro Area rose by 0.3% QoQ in 4Q 2023, accelerating from the 0.2% gain realized in 3Q 2023. The 4Q 2023 figure was in line with preliminary estimates and marked the eleventh consecutive quarter of growth in employment for the bloc.
Domestic Economy
The House committee advanced a bill on Thursday that could lead to a nationwide ban against TikTok on all electronic devices. The legislation also has the support of the White House and House Speaker Mike Johnson, and heads to a floor vote next week.
Markets
Representing half of the market (by market capitalization) Consumer Discretionary (0.76%), Technology (1.58%), and Communications Services (1.62%) helped push broad indexes higher as the Dow gained, the Russell 2000 added 0.81%, the S&P 500 rose 1.03%, and the Nasdaq Composite closed up 1.51%. Whatever weakness there was could be found in Real Estate which closed flat, and Financials, which gave back 0.15% as declines in Berkshire Hathaway (BRK.B), Mastercard (MA), Visa (V), and JP Morgan (JPM) weighed on the sector.
Shares of Kroger (KR) had a strong day, up 9.88% after the company reported a strong quarter and provided an upbeat outlook for 2024 prompting analysts to raise price targets while maintaining ratings. Here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: 2.92%
- S&P 500: 8.12%
- Nasdaq Composite: 8.41%
- Russell 2000: 2.84%
- Bitcoin (BTC-USD): 59.73%
- Ether (ETH-USD): 68.49%
Stocks to Watch
We have no market-moving earnings reports this morning, but investors will digest the impact from those last night including Broadcom (AVGO), Marvell (MRVL), and Costco (COST) - see more below. Pre-market breadth is healthy today as 262 names in the S&P 500 have traded hands so far this morning with 148 gainers and 113 decliners. Shares of Costco (COST) are coming under some pressure this morning (more below) as are shares of Broadcom (AVGO) (more below) while Hilton Worldwide (HLT), Biogen (BIIB), and Nvidia (NVDA) are topping the gainers leaderboard.
Taiwan Semiconductor (TSM) announced its revenue for February was ~NT$181.65 billion, a decrease of 15.8% from January 2024 but on a YoY basis rose 11.3%.
Shares of Broadcom (AVGO) slipped in aftermarket trading last night as the market looked past its January quarter beat, focusing instead on its outlook for 2024. Despite strength in its business, including "strong demand for our networking products in AI data centers, as well as custom AI accelerators from hyperscalers, are driving growth in our semiconductor segment," Broadcom’s revenue forecast of $50.0 billion, essentially matched the $50.2 billion consensus forecast. Following the 75% move in AVGO shares, the market was expecting the company’s guidance to surprise to the upside, rather than just meet expectations.
Following strong January quarter results, shares of Marvell Technology (MRVL) shares are down in premarket trading following the company’s disappointing April quarter outlook. AI was a factor in the company’s January quarter, driving strong growth in Marvell’s data center end market revenue which increased 38% sequentially and 54% year-over-year. Marvell expects revenue for the quarter to be around $1.092-1.208 billion vs. the $1.38 billion consensus with EPS between $0.18-$0.28, well below the $0.41 market forecast. However, management shared that while it is forecasting soft demand impacting its consumer, carrier infrastructure, and enterprise networking segments in the near term, it expects those revenue declines to be behind it after the April quarter and projects a recovery in the second half of the fiscal year.
Costco (COST) reported February quarter EPS that topped market expectations but its revenue for the quarter rose 5.7% YoY to $58.44 billion, landing shy of the $59.11 billion consensus. Comparable sales for the quarter, excluding the impacts from changes in gasoline prices and foreign exchange, rose +5.8% during the quarter and its eCommerce comp sales climbed 18.2%. Exiting the quarter, Costco had 73.4 million paid household members, up 7.8% versus last year, and 132.0 million cardholders, up 7.3%, with continuing growth throughout the quarter. For all of 2024, the company targets 30 net new warehouse openings.
Gap (GPS) shares stock jumped 4% following the company's announcement of better-than-expected Q4 earnings. This was driven by strong comparable sales for its Old Navy and Gap brands, as well as significant improvements in margins and cash flow. Looking ahead to Q1, the company anticipates sales to remain steady compared to 1Q23 at $3.3B, almost in line with the consensus of $3.27B.
IPOs
Razor maker and grooming company Harry's files confidentially for IPO, hiring Goldman Sachs (GS), JPMorgan (JPM), Barclays (BCS), and Wells Fargo (WFC) to underwrite its deal.
Readers who want to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
We’re closing out another trading week, which means no companies are expected to report quarterly results after equities stop trading today. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Monday, March 11
- Japan: Machine Tool Orders - February
- US: Consumer Inflation Expectations - February
Tuesday, March 12
- Japan: Producer Price Index - February
- Germany: Inflation Rate, Consumer Price Index - February
- US: NFIB Small Business Optimism Index - February
- US: Consumer Price Index - February
- US: Treasury Budget - February
Wednesday, March 13
- Eurozone: Industrial Production - January
- UK: Industrial Production, Manufacturing Production - January
- US: Weekly MBA Mortgage Applications
- US: Weekly EIA Crude Oil Inventories
Thursday, March 14
- US: Producer Price Index - February
- US: Retail Sales - February
- US: Business Inventories - January
Friday, March 15
- US: Import/Export Prices - February
- US: Industrial Production & Capacity Utilization - February
- US: The University of Michigan Consumer Sentiment Index (Preliminary) - March
Thought for the Day
“If you don’t fail, you’re not even trying.” ~ Denzel Washington
Disclosures
- Broadcom (AVGO), Marvell (MRVL) are constituents of the Tematica BITA Digital Infrastructure & Connectivity Index
- Costco (COST) is a constituent of the Tematica BITA Big Spenders & Savers Index
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Other Topics
Stocks Economy Earnings Central Banks
Chris Versace
Christopher (Chris) Versace is the Chief Investment Officer and thematic strategist at Tematica Research. The proprietary thematic investing framework that he’s developed over the last decade leverages changing economic, demographic, psychographic and technology landscapes to identify pronounced, multi-year structural changes. This framework sits at the heart of Tematica’s investment themes and indices and builds on his more than 25 years analyzing industries, companies and their business models as well as financial statements. Versace is the co-author of “Cocktail Investing: Distilling Everyday Noise into Clear Investing Signals” and hosts the Thematic Signals podcast. He is also an Assistant Professor at NJCU School of Business, where he developed the NJCU New Jersey 50 Index.
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Mark Abssy
Mark Abssy is Head of Indexing at Tematica Research focused on index and Exchange Traded Product development. He has product development and management experience with Indexes, ETFs, ETNs, Mutual Funds and listed derivatives. In his 25 year career he has held product development and management positions at NYSE|ICE, ISE ETF Ventures, Morgan Stanley, Fidelity Investments and Loomis Sayles. He received a BSBA from Northeastern University with a focus in Finance and International Business.
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