Pre-market futures are bouncing back nicely after stock indexes fell off the table on Friday. Market participants were in no mood late last week for leaving equities lingering near highs when an entire weekend of potential surprises may have awaited them. That we didn’t get any major news items or government policies to send markets down further, shares are on the rise.
The Dow has so far clawed back around +250 points of the nearly -750 it lost on Friday, +0.59% versus -1.70%. The Nasdaq is +94 points, +0.44%, from -2.20% the prior trading session. The S&P 500 has gained +0.49% of the -1.71% it lost in the market before the weekend got underway. These top indexes are down over the past month of trading, but up year-to-date by roughly +2% — aside from the small-cap Russell 2000, which is -1.6% since the start of the year.
From several perspectives, equally as important this week as Friday morning’s Personal Consumption Expenditures (PCE) — the Fed’s preferred gauge on inflation — is Wednesday afternoon’s earnings report from NVIDIA (NVDA). The graphics chip innovator is up +1900% over the past five years, with the past eight quarters of earnings beats tracking the most significant gains of that massive run-up, but only flat year to date.
Expectations for NVIDIA’s Q4 report remain stellar: +61.5% earnings growth projected and +70.7% in revenue growth. The trailing four-quarter average is for a nearly +10% earnings beat. As such, NVIDIA continues to have a Zacks Rank #2 (Buy) rating, with a Value - Growth - Momentum score of C.
As far as January PCE is concerned, year-over-year is supposed to tick down 20 basis points (bps) to +2.4%. Core year over year is also expected to shed 20 bps to +2.6%. Personal Income is anticipated to tick up slightly, but Personal Spending looks to fall half a percentage point from the previous month, to +0.2%. Still growing, but weakening. This is what the Fed wants to see.
It’s also Housing Week this week, with Case-Shiller Home Prices out Tuesday morning, New Home Sales Wednesday and Pending Home Sales Thursday. Without much progress on interest rates/mortgage levels, we don’t expect much of a change to the overall narrative. However, we have seen at least some homebuyers accepting the higher-cost realities of housing presently; this is not the direction the Fed wants to see take hold.
Ahead of today’s open, Domino’s Pizza (DPZ) posted a slight disappointment in its Q4 report this morning, with earnings of $4.89 per share coming up 4-cents shy of the Zacks consensus (though still up nicely from the $4.48 per share earned in the year-ago quarter). Revenues reached $1.44 billion, -2.27% lower than analysts had projected. Shares are down -5.5% in today’s pre-market on the news, more than cutting in half the +10% gains for the stock year to date.
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