Market Overview
The stock market had a mixed performance today. Major indices ended near their session highs due to a late afternoon rally. The S&P 500 closed slightly higher, gaining less than one point after being down by as much as 1.0%. The Nasdaq Composite dropped as low as 1.4% but finished only 0.1% lower. Meanwhile, the Dow Jones Industrial Average, which was down by as much as 0.4%, ended the day 0.3% higher.
Many stocks took part in the afternoon rally, which mostly occurred after the bond market's cash session ended. The 10-year Treasury yield increased by four basis points to 4.41%, and the 2-year yield rose by three basis points to 4.30%. Initially, Treasury yields fell due to geopolitical concerns after reports that Ukraine fired UK-made missiles into Russia. However, safe-haven buying waned after Fed Governor Bowman suggested a cautious approach to lowering the policy rate, and a $16 billion 20-year bond auction showed weak demand.
Sector Performance
Weakness in mega-cap stocks limited index performance throughout the session. Retailers, particularly Target (TGT, Financial), were notably weak following disappointing guidance. The S&P 500 sector performance was mixed. The health care sector (+1.2%) and energy sector (+1.0%) led the gains, while consumer discretionary (-0.6%), financials (-0.3%), and information technology (-0.2%) sectors underperformed.
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Today's News
Nvidia (NVDA) reported impressive Q3 results, with a Non-GAAP EPS of $0.81, exceeding expectations by $0.06. The company's revenue soared to $35.08 billion, marking a 93.6% increase year-over-year, and surpassed estimates by $1.95 billion. A significant highlight was the record quarterly Data Center revenue of $30.8 billion, reflecting a 17% rise from Q2 and a 112% increase from the previous year. CEO Jensen Huang emphasized the transformative impact of AI across industries and nations, as Nvidia's Hopper and Blackwell GPUs see unprecedented demand. The company projects Q4 revenue to reach $37.5 billion, slightly above consensus estimates.
Elon Musk's artificial intelligence startup, xAI, has reached a valuation of $50 billion following a successful funding round that raised $5 billion. Notable investors in this round included Qatar Investment Authority, Valor Equity Partners, Sequoia Capital, and Andreessen Horowitz. xAI, which aims to leverage AI for scientific discovery, plans to utilize part of the funds to acquire up to 100,000 Nvidia H100 GPUs for its data center in Memphis, Tennessee.
Target (TGT, Financial) experienced a significant share-price decline, marking its worst performance since May 2022. The retailer's Q3 earnings of $1.85 per share fell short of Wall Street expectations, and its future guidance was also below forecasts. Despite a slight 0.3% increase in comparable sales and a 2.4% rise in guest traffic, the average ticket value declined, reflecting cautious consumer spending, particularly in discretionary categories. This led to a 21% drop in Target's stock, affecting several exchange-traded funds with substantial holdings in the retailer.
Snowflake (SNOW, Financial) saw its shares rise by 13% in early post-market trading after posting strong Q3 results that exceeded expectations. The company reported a 29% year-over-year growth in product revenue, reaching $900.3 million. Its adjusted EPS of $0.20 beat the consensus by $0.05, while total revenue of $942.1 million surpassed estimates by $43.63 million. Snowflake forecasts robust product revenue growth for the next quarter, further boosting investor confidence.
Super Micro Computer (SMCI, Financial) has been notified by Nasdaq for non-compliance with listing rules due to delayed report filings with the SEC. The company has submitted a compliance plan, indicating its ability to complete the required filings. Despite this setback, Super Micro's shares rose 1.6% in extended trading, as the company continues to work towards resolving the issue.
Palo Alto Networks (PANW, Financial) reported a Q1 Non-GAAP EPS of $1.56, surpassing estimates by $0.08. The company's revenue increased by 13.8% year-over-year to $2.14 billion, beating expectations by $20 million. The outlook for Q2 suggests continued growth in Next-Generation Security ARR, with revenue projected to rise between 12% and 14% year-over-year.
TJX Companies (TJX, Financial) revised its FY25 revenue guidance to a range of $55.9 billion to $56.1 billion, slightly below consensus estimates. For Q4, the company anticipates a year-over-year decline in revenue, attributing it to less favorable macroeconomic conditions. Despite the lowered outlook, TJX remains optimistic about its long-term prospects, with CEO Ernie Herrman downplaying the impact of potential tariffs on Chinese imports.
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