Finance

US futures slip in countdown to Nvidia earnings


US stock futures slipped on Wednesday as investors counted down to high-stakes earnings from AI darling Nvidia (NVDA) and the release of Federal Reserve minutes that could set hopes for interest rates.

S&P 500 (^GSPC) futures dropped roughly 0.2%, while those on the Dow Jones Industrial Average (^DJI) shed 0.1%. Contracts on the tech-heavy Nasdaq 100 (^NDX) led the way lower, down 0.4% on the heels of Tuesday’s declines.

Stocks are lagging with the focus fixed on looming results from Nvidia, whose shares fell 4% on Tuesday for their worst day since Oct. 17 as investors positioned for the release. Expectations are running high for the chipmaker’s fourth quarter results, seen both as a barometer for the AI trade and a potential turning point for stocks more broadly.

The market is on edge for any disappointment in the report, expected after the bell. Nvidia is one of a small group of megacaps behind a big chunk of recent gains for stock indexes. Mixed prospects for growth among those “Magnificent 7” stocks have prompted hedge funds to cut holdings, according to Goldman Sachs.

In corporates, shares of Palo Alto Networks (PANW) tumbled over 20% in premarket after the cybersecurity provider cut its annual revenue forecast, igniting concerns about a potential pullback in tech spending. Meanwhile, Walgreens shares (WBA) slid 3% after the pharmacy giant lost its spot on the blue-chip Dow index to Amazon (AMZN).

The wait is also on for minutes from the Fed’s January meeting, scrutinized for insight into whether policymakers are anywhere near likely to ease up on interest rates. Recent discouraging data has prompted a wavering in conviction the central bank will cut rates in June, seen as the most probable timing.

Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards

Elsewhere, a $3 billion hit to leading lender HSBC’s profit from a charge on its stake in a Chinese bank rattled nerves about the fallout from problems in the world’s second-biggest economy. HSBC shares dropped about 8% in premarket trading.

Live1 update

  • Palo Alto Networks gets pummeled

    If you could only hear the chatter very early in the morning in the Yahoo Finance newsroom on one of the more favorite tickers on our platform: lightning-hot tech play Palo Alto Networks (PANW)…

    The a.m. team seems to be of the view that Palo Alto Networks is unstoppable (which is in line probably with a lot of you that have traded this name in the past two years). I get it: The stock gained 377% in the past five years before the 22% premarket, post-earnings drubbing today. Palo Alto’s meteoric stock price has been supported by strong rates of growth amid demand for cybersecurity products.

    But I reminded the team that several things appeared to change fundamentally around Palo Alto Networks last night. And if you put them together, the steep sell-off looks warranted, and the stock may stay capped in the near-term until investors get more comfortable.

    For one, the company’s billings outlook was 10% below consensus expectations. Palo Alto Networks said it’s seeing some federal demand softness. I fancy there is more here, though — specifically demand softness from big companies — akin to what we heard from Cisco (CSCO) last week (it’s also in the cybersecurity business).

    And two, Palo Alto Networks surprised the Street via a new pricing strategy. It’s one that could impact profit margins this year and perhaps into 2025.

    The strategy shift reflects Palo Alto Networks more aggressively trying to gain market share by giving customers short-term access to solutions for “free.”

    “This pricing/bundling/consolidation strategy can weigh on results over the next 12-18 months,” warned Stifel analyst Adam Borg in a client note this morning.

    Welcome to the show-me story zone, PANW.



Source link

Leave a Reply