The futures markets are trading well in the green this morning, following a weak market performance yesterday. Home retailer Lowe's Companies (LOW) posted stronger fourth-quarter results and guidance, while the shares of General Motors (GM) are benefiting from a notable dividend raise and an increased share-repurchase program, bringing the total authorization to $6 billion. Overall, this suggests a strong start to the trading day. After the market opens, new home sales for January will be released, and that report could potentially shift sentiment in housing stocks.
Many market participants will be looking at the latest earnings release by NVIDIA Corp. (NVDA), which is set to report after the market closes. The semiconductor maker has a $3 trillion market cap and is one of the largest constituents of the S&P 500 and NASDAQ 100. It makes up a portion of the Dow Jones Industrial Average as well, albeit a smaller one. Its fiscal fourth-quarter earnings and future outlook for its Blackwell chips will likely be a key driver for the major indices in the days ahead, especially considering the importance of Blackwell chips for growth in the artificial intelligence (AI) space.
The markets shifted lower yesterday as a slew of economic data hurt trader sentiment. Consumer confidence was lower than the Street’s expectations, and the S&P Case-Shiller Index showed home prices rising 4.48% year over year. According to the S&P Case-Shiller Index, home prices were down 0.13% in December, month over month, suggesting some inflationary reprieve in housing prices. The major market indices initially fell early in yesterday’s session before trending sideways through much of the day. The indices then shifted lower again in the final portion of the session. Overall, the S&P 500 fell 28 points (down 0.47%) and the NASDAQ declined 261 points (down 1.35%). The Dow Jones Industrial Average generally followed the same pattern, but managed to remain in the green for much of the day. For the day, the Dow increased 160 points (up 0.37%), boosted by stronger performance from a few key retailers, including Walmart (WMT) and Home Depot (HD). Market breadth was quite positive, with advancers outpacing decliners by a 1.4-to-1.0 ratio. Consumer staples stocks were among the best performers on the day, while communications issues were among the weakest. This indicates that some traders are becoming more defensive in their market positioning.
In commodity news, oil prices fell quickly yesterday. Despite new sanctions on Iranian oil, the market is pricing in both potential increases in supply from OPEC in April and that the war in Ukraine could reach a conclusion in the weeks ahead, potentially allowing for fewer worldwide sanctions on Russian oil.
Meantime, U.S. Treasury bond yields were largely lower yesterday, with long-term rates falling more than those with shorter durations. The Chicago Board Options Exchange Volatility Index, or VIX, commonly known as the fear index, fell slightly yesterday as traders priced in less options demand. The cryptocurrency Bitcoin dropped lower than the $90,000 level, following significant selling, which dragged down several related stocks.
Several economic reports are on the docket for the days ahead. These include initial jobless claims, pending home sales, and the second reading of U.S. gross domestic product (GDP) for the fourth quarter on Thursday. On Friday, the core and non-core Personal Consumption Expenditures (PCE) Price Index for January, personal spending and income, and the advanced retail inventories for January are slated for release. Elsewhere, several dozen, mostly smaller and foreign companies will report quarterly results in the days ahead. - John E. Seibert III
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
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