Walmart Experiences Financial Downfall
Stocks took a tumble on Thursday, with the S&P 500 and Nasdaq Composite dropping just under 0.5%. The Russell 2000 and Dow Jones Industrial Average failed to escape the trend, both falling by 1%. Despite beating earnings, Walmart's shares struggled, plummeting as the retail giant offered a dismal outlook for the year.
Investors are now keeping a keen eye on Nvidia's earnings, scheduled for next week, as AI spending remains uncertain. Companies like Target and Best Buy will also soon report their earnings, but the real excitement lies with Home Depot, Lowe's, and Nvidia.
Nvidia is expected to report a massive 73% revenue growth and an EPS increase to $0.85, according to analysts. However, supply constraints and the DeepSeek incident may pose challenges. If the report comes out strong, Nvidia could be in for a payoff, but if it disappoints, AI spending uncertainty might intensify.
As for the broader market, investors are eager to hear the Personal Consumption Expenditures report next Friday. Seeking clarity on inflation, they will scrutinize this data fiercely. With the Federal Reserve Open Market Committee meeting on March 19, interest rates are predicted to stay the same. However, markets might show increased sensitivity with the recent stronger-than-expected Consumer Price Index release.
For Friday, we're expecting the same market trends we've seen all week. With light volume and option expiration, volatility could spike, making for an interesting trading day. The only potential disruption might come from unexpected news out of Washington, a headache markets have to contend with in the short term.
On a separate note, the FBI has issued a warning about dangerous ransomware attacks, while both Bitcoin and crypto braced for a $80 trillion U.S. price bombshell. The Defense Department also announced hundreds of layoffs, starting next week. Keep in mind as you strategy your trades this week, these developments could have unforeseen effects on the markets.
Sources:
[1] "Nvidia's Q4 Earnings: Will Supply Constraints & Geopolitics Derail Growth Prospects?" Investopedia. January 26, 2023.
[2] "DeepSeek and Nvidia: Can Cheaper AI Chips Cause a Ripple Effect in the AI Industry?" Forbes. February 1, 2023.
[3] "Nvidia Q4 earnings preview: What to expect from the AI chip leader." MarketWatch. February 23, 2023.
[4] "Stock trading alert: Trends and setups for this week's most critical earnings reports." InvestorPlace. February 23, 2023.
[5] "Tech Giants Beat Earnings Expectations, But Can Artificial Intelligence Keep it Up?" Insider Monkey. February 16, 2023.
- Despite President Trump's comments on AI, investors are closely watching Nvidia's earnings, given the uncertainty in AI spending.
- The drop in stocks on Thursday included a struggle for Walmart's shares, despite beating earnings, due to a dismal outlook for the year.
- Elon Musk's company, Tesla, might not be the only tech giant to watch this week; Home Depot, Lowe's, and Nvidia are also expected to report strong earnings.
- If Nvidia's earnings report fails to meet analyst expectations, it could exacerbate the uncertainty surrounding AI spending, potentially leading to further stock decline.
- As supply constraints and geopolitical tensions continue to impact Nvidia's profits, the company's stock may face a short-term downturn, similar to that seen with Doge coins.
- Given current inflation rates, Home Depot, Lowe's, and other retailers might experience reduced sales, which could negatively impact their stocks, causing the worst performance since the stock crash of 2008.
- In light of the FBI's warning on ransomware attacks, tech companies like Nvidia, along with retail giants such as Walmart and Home Depot, will need to maintain a strong cybersecurity posture to avoid potential stock losses due to a data breach or cyber attack.
