The big picture today
Asia-Pacific stock indices ended today’s session mixed, with Korea’s KOSPI down 0.18%, Hong Kong’s Hang Seng and Japan’s Nikkei both down 0, 27% and Taiwan’s TAIEX fell 0.84%, while China’s Shanghai Composite rose 0.50% and Australia’s ASX All Ordinaries gained 0.71%. . India Sensex led the way closing 0.94% on the day. At midday, the main European stock indices are up.
US futures are pointing to a mixed market open later this morning with Dow and S&P 500 futures indicating a modest positive open, while futures for the Nasdaq Composite are signaling the opposite. Tech stocks weigh on soft advice released last night by Nvidia (NVDA) and reports this morning that Apple (AAPL) has once again slashed its forecast for the iPhone and expects near-stagnant production of the device this year. Before U.S. equities begin trading, we’ll get a second look at GDP for the first quarter of 2022 as well as another plate of retail earnings, with more on deck after today’s market close. What we learn on the demand front as well as the supply and inventory front will likely shape how stocks end the week before the weekend when stocks close for Memorial Day.
There are no major economic data points for the international economy released today.
The nonpartisan Congressional Budget Office (CBO) has estimated that real gross domestic product, or GDP, will grow 3.1% in 2022, driven by consumer spending and demand for services. For 2023 and 2024, the CBO has revised its GDP growth estimates to 2.2% and 1.5%, respectively. In terms of inflation, the CBO shared its view that “roaring” inflation has peaked and is expected to cool monthly to around 2% at some point in 2024. Incorporated into this forecast, the CBO expects the Fed to raise its benchmark overnight interest rate to 1.9% by the end of 2022 from the prevailing market narrative of just over 2.5%.
At 8:30 a.m. ET, we’ll have the usual initial weekly jobless claims, but also the second GDP reading for the March quarter, which is expected to slip and remain little changed at -1.3%. The GDP price index for the March quarter, however, is expected to rise to 8.0% from the initial figure of 7.1%. Investors and traders will want to see other changes contained in the updated report, including actual consumer spending and the PCE price index for the March quarter.
At 10 a.m. ET, the April pending home sales numbers will be released, and they’re expected to drop 2% per month. Shortly after, at 10:30 a.m. ET, the EIA’s weekly natural gas inventory data will be released and as we head into the summer sweltering that means turning on the air conditioning, a sense of Lighter-than-expected inventory could push up natural gas prices.
Stocks rose on Wednesday even after minutes from the Federal Reserve’s May policy meeting showed the central bank was ready to raise rates more than the market had expected. The Dow Jones Industrial Average closed up 0.60%, the S&P 500 gained 0.95% and the Nasdaq Composite rose 1.51%. While growth concerns lingered, a buy-down mentality persisted, particularly for small-cap stocks, as evidenced by yesterday’s 1.95% move in the Russell 2000. yesterday, here’s how the main market indicators are stacking up since the start of the year:
- Dow Jones Industrial Average: -11.61%
- S&P 500: -16.52%
- Nasdaq compound: -26.91%
- Russell 2000: -19.87%
- Bitcoin (USD-BTC): -38.30%
- Ether (ETH-USD): -52.00%
Stocks to Watch
Prior to the start of trading for stocks listed in the United States, Alibaba (BABA), Baidu (BIDU), Burlington Stores (BURL), Dollar General (DG), Dollar Tree (DLTR), Jack in the Box (JACK), Macy’s (M), and Sanderson Farms (SAFM), are supposed to publish their quarterly results.
Bloomberg reports Apple (AAPL) plans to keep iPhone production flat in 2022, asking vendors to assemble around 220 million iPhones compared to market forecasts of more than 240 million units.
Nvidia (NVDA) reported that its April quarter revenue climbed 46.4% year-over-year to $8.29 billion, beating consensus of $8.09 billion, while EPS for the quarter stood at $1.36, $0.07 per share ahead of the consensus forecast. For the current quarter, taking into account approximately $500 million in lost revenue due to the Russian and Chinese lockdowns, Nvidia is forecasting revenue of between $7.94 billion and $8.26 billion. The networking product offering is still limited, although an improvement throughout the year is expected, but gaming revenue is expected to decline in the July quarter and the absence of Russia is expected to have a digit data center revenue of $100 million in the current quarter. The company also said it had increased and extended its share buyback program to a total of $15 billion through December 2023.
Splunk (SPLK) reported better-than-expected April quarter results for both revenue and earnings, and guided revenue for the current quarter and full year ahead of consensus expectations. For the full year, Splunk now sees revenue of $3.30-3.35 billion versus consensus of $3.28 billion.
While the April quarter revenues recorded by Guess? (GHG) rose 14% year-over-year, beating consensus forecasts, EPS for the quarter was below consensus by $0.29. For the current quarter, guess? sees revenue increase about 1%, suggesting $635.3 million versus consensus of $641.8 million.
Revenue and EPS for the quarter from April to Williams-Sonoma (WSM) beat consensus expectations, with same-brand revenue growing +9.5% year-on-year with double-digit gains at and Pottery Barn. The company reiterated its performance expectations for FY23, in line with its long-term financial forecast of mid-to-high single-digit annual net revenue growth, pushing revenue to $10 billion by 2024.
Twitter (TWTR) Shares rose after hours following an SEC filing in which Elon Musk pledges to provide an additional $6.25 billion in equity financing to fund part of the consideration for the merger by amending and restating the Amended Share Commitment Letter, dated May 4, 2022, to increase the aggregate principle amount of equity commitment thereunder to $33.5 billion of dollars,
No initial public offering (IPO) is expected to take place this week. Readers who want to dig deeper into the schedule of upcoming IPOs should visit Nasdaq’s Latest and Upcoming IPOs page.
After today’s market close
American Eagle (AEO), Costco (COST), Dell (DELL), Farfetch (FTCH), Gap (GPS), Marvell (MRVL), Red Robin Gourmet (RRGB), Ulta Beauty (ULTA), VMware (WMW) and Jour of work (WDAY) should publish their latest quarterly results. Investors should be on the lookout for companies that announce their March quarter results in advance. Those interested in learning more about which companies release their reports when head to the Nasdaq earnings calendar.
on the horizon
Friday May 27
- United States: personal consumption and income – April
- United States: Michigan Sentiment Index (final) – May
Thought of the day
“We don’t mind a market downturn. This is an opportunity to increase our stake in large companies with excellent management at good prices. ~Warren Buffett
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.