Today’s Big Picture
Asia-Pacific equity markets finished the day mixed. Japan’s Nikkei fell 0.11%, Hong Kong’s Hang Seng shed 0.15%, and South Korea’s KOSPI closed 0.37% lower in a mixed day that saw declines in Electronic Technology names make the difference. India’s SENSEX gained 0.27%, Australia’s ASX All Ordinaries rose 0.54%, Taiwan’s TAIEX added 0.60%, and China’s Shanghai Composite closed 1.94% higher. European markets are mostly down in midday trading and U.S. equity futures are pointing to a lower open as Wall Street gets ready for the latest reading for one of the Fed’s favored inflation metrics.
When the January Personal Income & Spending report is published at 8:30 AM, market watchers will be more interested in the core PCE Price Index reading for the month and how it compares to the 2.9% reading for December. Setting the stage for this metric, the preponderance of January inflation data that has come in ahead of market forecasts suggests the Fed’s concern over its progress on inflation stalling is a valid one. That recent string of data suggests we could see little movement in the January core-PCE figure. A higher than expected result could throw some cold water on the year to date market rally.
However, in our view, it will be tomorrow’s February Manufacturing PMI and next week’s February Services PMI that will provide greater insights on inflation compared to another piece of January data. That same February data will also reveal the pace of the economy as we enter the last month of the March quarter. Our thinking is that so long as that data confirms an economy growing above trend, it will give the market reason to shrug off sticky inflation data points and provide a rationale for another push on expectations for the start of the Fed’s next rate cutting cycle.
Data Download
International Economy
Retail Sales in Germany decreased 1.40% YoY and 0.4% MoM in January. It was the third straight month of fall in retail turnover, as elevated inflation and high borrowing costs continued to rattle demand.
Consumer credit in the United Kingdom grew by £1.877 billion in January 2024, following £1.257 billion in the prior month and compared with market estimates of £1.6 billion. This was mainly driven by higher borrowing through credit cards, which rose from £0.3 billion in December to £0.9 billion in January.
Domestic Economy
In addition to the January data discussed above, today also brings the January Pending Home Sales figures as well as the usual weekly Thursday data that are weekly Initial and Continuing Jobless Claims, and natural gas inventories.
Congressional leaders have struck a deal to avert a government shutdown this week, agreeing to punt a pair of funding deadlines later into March to buy more time for spending talks. Under the deal, leaders have agreed to extend funding for six full bills covering the departments of Agriculture, Justice, Commerce, Energy, Interior, Transportation, and Housing and Urban Development through March 8.
Markets
Yesterday saw mixed results from sectors but the influence of Technology (-0.47%) and Communication Services (-0.68%) was enough to push broad indexes into a down day. The Dow came close to flat, down 0.06%, the S&P 500 dropped 0.17%, the Nasdaq Composite gave back 0.55% and the Russell 2000 closed 0.77% lower.
While markets overall were tepid there were some bright spots, specifically, shares of Axon Enterprise Inc (AXON) which gained 13.76% following the company’s estimate beating reported quarter and strong guidance. Here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: 3.34%
- S&P 500: 6.29%
- Nasdaq Composite: 6.24%
- Russell 2000: 0.65%
- Bitcoin (BTC-USD): 48.78%
- Ether (ETH-USD): 46.83%
Stocks to Watch
ACI Worldwide (ACIW), Anheuser-Busch InBev (BUD), Bath & Body Works (BBWI), Best Buy (BBY), Birkenstock (BIRK), Celsius (CELH), Dentsply Sirona (XRAY), GoodRx (GDRX), Hormel Foods (HRML), Papa John’s (PAPA), and Utz Brands (UTZ) are expected to release quarterly earnings before equities begin trading later this morning.
Pre-market breadth is lighter today as 211 names in the S&P 500 have traded hands so far this morning with 68 gainers and 143 decliners. Decliners of note include Snowflake (SNOW), WW (WW), and HP Inc (HPQ) (more below on all three) while Monster Beverage (MNST), and Paramount Global (PARA) are seeing strong support this morning following positive earnings reports and guidance.
Salesforce (CRM) reported January quarter results that edged out consensus expectations, but the company issued mixed fiscal 2025 guidance. For the coming year, management guided revenue to $37.7-$38.0 billion, below the $38.65 billion consensus forecast with EPS of $9.68-$9.76 versus the $9.61 consensus. Salesforce also initiated a quarterly dividend of $0.40 per share and a share repurchase program authorization increased by $10 billion.
Shares of HP (HPQ) slipped in aftermarket trading last night after the company reported quarterly results that met consensus EPS expectations of $0.81. Revenue for the quarter fell 4.4% YoY to $13.19 billion, missing the $13.56 billion market forecast. Personal Systems segment revenue was $8.8 billion, down 4% YoY, while Consumer PS net revenue was down 1% and Commercial PS net revenue was down 5%. Total units for the quarter rose 5% with Consumer PS units up 10% and Commercial PS units up 2%. HP’s Printing segment revenue was $4.4 billion, down 5% YoY. HP issued guidance for both the current quarter and 2024 that bookended consensus expectations.
Shares of Snowflake (SNOW) were under heavy pressure last night after the company forecasted a significant slowdown as well as a change to its management team. For its fiscal 2025, the company guided revenue to be up 22% YoY compared to the 38% achieved in fiscal 2024. CEO Frank Slootman will be replaced by Sridhar Ramaswamy, effective immediately. Slootman will remain the chairman of the board.
Shares of cybersecurity company Okta (OKTA) surged after handily topping consensus expectations for its January quarter. Okta also reported a 13% Y/Y increase in subscription backlog to $3.39B at the end of the quarter. For the current quarter, the company pegged revenue at $603-$605 million compared to the $584 million consensus and the $605 million posted for the January quarter.
Following disappointing fiscal 2024 top line guidance of $830-$860 million compared to the market forecast of $924 million, shares of WW (WW) are falling in pre-market trading. Baked into that outlook is a $55 million year-over-year headwind from the strategic decision to wind down the Company’s low-margin consumer products business. During the earnings call, CEO Sima Sistani shared that as the supply of GLP-1 medications returns, “we will be adjusting our marketing approach moving more into performance-based tactics for clinic and highlighting our sustainable approach to medical weight loss.”
IPOs
Readers who want to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
Arlo Technologies (ARLO), Autodesk (ADSK), Cooper (COO), Dell (DELL), Fisker (FSR), Hewlett Packard Enterprises (HPE), Navitas Semiconductor (NVTS), Sweetgreen (SG), and Zscaler (ZS) 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
Friday, Mach 1
- Japan: Jibun Bank Manufacturing PMI (Final) – January
- China NBS Manufacturing & Non-Manufacturing PMI – February
- China: Caixin Manufacturing PMI – January
- Eurozone: HCOB Manufacturing PMI (Final) – February
- UK: S&P Global Manufacturing PMI (Final) – February
- US: S&P Global Manufacturing PMI (Final) – February
- US: ISM Manufacturing Index – February
Thought for the Day
“The best revenge is not to be like your enemy.” – Marcus Aurelius
Disclosures
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.