Weekly Market Update: Nvidia Does It Again
Coming into the week the path for least resistance clearly remained to the upside for global equity markets. ECB officials stayed steadfast pointing to a June rate cut as all but guaranteed. Fed officials remained vociferous that though they want to see additional data to confirm a disinflation trajectory, but also the next move will not be a hike. The glow of all things AI continued to support trading heading into a key event from Microsoft, and of course Nvidia’s earnings. Crude prices tracked lower by -4% adding to the positive landscape for investors. The S&P and NASDAQ continued to make fresh all-time highs. Ethereum jumped more than 20% on hopes of an SEC approval for spot ETFs and Bitcoin remained near $70K. For the week the NASDAQ rose 1.4%, S&P finished flat and the Dow fell 2.3%.
Equity markets finally encountered some turbulence mid-week after the latest FOMC minutes noted various participants mentioned their willingness to tighten policy further should risks to the outlook materialize. S&P PMI readings seemed to be a catalyst after April readings handily topped estimates, but more importantly the accompanying commentary on sticky inflation and pricing pass through weighed on sentiment. Selling begot additional selling in Thursday afternoons trading session after the 10-year TIPS auction saw tepid demand. The Fed's Bositc closed out that session by suggesting the Fed may have to be a little more patient when it comes to lowering rates in order to avoid overheating. Treasury yields rose with the 2-year pushing back up in the vicinity of 5% as investors remained sanguine on the prospects for any Fed rate cuts until late this year, if at all.
Nvidia blew away numbers and raised their outlook aggressively yet again. Importantly management continued to talk up and environment where demand is continued to far outpace supply through next year. CEO Huang reiterated that token generation will drive a multi-year build of AI factories. The AI behemoth also announced a 10:1 stock split after months of speculation, as well as announced 150% increase to its dividend. Microsoft and other PC producers introduced a slew of new AI products at the Microsoft AI event. JP Morgan held their annual investor day and tweaked higher their FY NII outlook, while CEO Dimon reiterated his own more tepid expectations given the current economic backdrop. Target Inc slumped after missing on the top and bottom line but reiterated they expect to return to positive SSS performance in Q2. Lowe’s Q1 results clearly outperformed that of Home Depot but SSS still fell 4% in the quarter. The decline in DIY big ticket discretionary spending was partially offset by positive comparable sales in Pro and online. Toll Brothers fell after their own earnings beat and raise, but both new and existing April home sales missed the mark by a wide margin. Boeing helped pressure the Dow’s 600 point decline on Thursday after indicating Q2 deliveries will not rise q/q and FCF is expected to be negative for the year.
MON 5/20
(TW) Taiwan Apr Export Orders Y/Y: 10.8% v 6.1%e (2nd straight positive reading)
HIMS Announces access to "compounded" GLP-1 Injections claiming same active ingredient; Prices start as low as $199 a month
JPM Raises FY24 NII 3.4% ex-CIB markets to $91B (prior 89B), adj expense outlook +1% to $92B (prior $91B) - investor day materials
MSFT Announces new category of AI-focused computers - AI day conf
OSG To be acquired for $8.50/shr in cash by Saltchuk Resources
PANW Reports Q3 $1.32 v $1.25e, Rev $1.98 v $1.97Be; Raises FY24 Outlook
RYA.IE Reports FY23/24 Adj Net €1.92B v €1.90Be, Rev €13.4B v €10.8B y/y; Approves €700M share buyback starting later this week
ZM Reports Q1 $1.35 v $1.19e, Rev $1.14B v $1.13Be; Raises FY guidance
TUES 5/21
(UK) APR CPI M/M: 0.3% V 0.1%E; Y/Y: 2.3% V 2.1%E
(US) Follow Up: Reportedly SEC on Mon asked Nasdaq and CBOE to make minor adjustments to spot Ether ETF filings, which could signal that approvals are near – press
LOW Reports Q1 $3.06 v $2.94e, Rev $21.4B v $21.1Be
TOL Reports Q2 $4.55 v $4.13e, Rev $2.84B v $2.52Be; Raises FY guidance
WED 5/22
(TW) China Military begins 'large-scale' drills 'surrounding' Taiwan; the drills are expected to end on Fri; May 24th – Press
(UK) APR CPI M/M: 0.3% V 0.1%E; Y/Y: 2.3% V 2.1%E
(US) CFPB to take steps to regulate BNPL firms, holding them to same standards as credit card firms – CNBC
(US) DOE CRUDE: +1.8M V -2ME; GASOLINE: -1M V -1ME; DISTILLATE: +0.40M V 0ME
(US) FOMC MAY MINUTES: MANY PARTICIPANTS COMMENTED ON THEIR UNCERTAINTY ABOUT THE DEGREE OF POLICY RESTRICTIVENESS
ADI Reports Q2 $1.40 v $1.26e, Rev $2.16B v $2.10Be; Guides Q3 Rev strong
DD To separate into three independent, publicly traded companies; Expects to complete separation in 18-24 months
MKS.UK Reports FY23/24 Adj £0.25 v £0.17 y/y, Adj Pretax £716.4M v £686Me, Rev £13.1B v £13.0Be; Starts tender offers for 2025, 2026 Notes in £400M at 4.750% and £300M 3.750% notes due 2026
NVDA Reports Q1 $6.12 v $5.49e, Rev $26.0B v $24.3Be; Confirms 10:1 stock split following speculation; Increases dividend 150%; "poised for our next wave of growth"
PDD Reports Q1 (CNY) 20.72 v 6.92 y/y, Rev 86.8B v 37.6B y/y
SNPS Reports Q2 $3.00 v $3.03e, Rev $1.46B v $1.52Be; Raises FY cont ops guidance following sale of SIG unit
TGT Reports Q1 $2.03 v $2.05e, Rev $24.1B v $24.5Be
TJX Reports Q1 $0.93 v $0.87e, Rev $12.5B v $12.5Be
THRS 5/23
(EU) ECB Q1 Euro-Area Negotiated Wage Index: 4.7% v 4.5% prior
(FR) FRANCE MAY PRELIMINARY MANUFACTURING PMI: 46.7 V 45.9E (17th month of contraction)
(UK) MAY PRELIMINARY MANUFACTURING PMI: 51.3 V 49.5E (moves back into expansion), above all estimates, highest since July 2022)
(US) INITIAL JOBLESS CLAIMS: 215K V 220KE; CONTINUING CLAIMS: 1.794M V 1.793ME
(US) MAY PRELIMINARY S&P MANUFACTURING PMI: 50.9 V 49.9E (5th month of expansion); Companies again sought to pass higher costs onto customers in the form of higher selling prices, the rate of increase of which accelerated slightly compared to Apr
(US) APR NEW HOME SALES: 634K V 679KE
992.HK Reports Q4 Non-HKFRS Attributable Net $218M v $158.4Me y/y, Rev $13.8B v 13.1Be y/y
DECK Reports Q4 $4.95 v $2.82e, Rev $959.8M v $880Me
INTU Reports Q3 $9.88 v $9.34e, Rev $6.74B v $6.63Be; Raises FY outlook
SCVL Reports Q1 $0.64 adj v $0.60e, Rev $300M v $292Me (1 est); Gained significant market share
WDAY Reports Q1 $1.74 v $1.57e, Rev $1.99B v $1.97Be; Lowered subscription revenue guidance reflects elevated sales scrutiny and lower customer headcount growth
FRI 5/24
(US) APR PRELIMINARY DURABLE GOODS ORDERS: 0.7% V -0.8%E; DURABLES (EX-TRANSPORTATION): 0.4% V 0.1%E