Today’s Big Picture
Asia-Pacific equity indexes ended today’s session mixed as Korea’s KOSPI fell 0.18%, Hong Kong’s Hang Seng and Japan’s Nikkei were both down 0.27% and Taiwan’s TAIEX declined 0.84%, while China’s Shanghai Composite rose 0.50% and Australia’s ASX All Ordinaries gained 0.71%. India’s Sensex led the way up closing ahead 0.94% on the day. By mid-day trading, major European equity indices are up.
U.S. futures point to a mixed market open later this morning with Dow and S&P 500 futures pointing to a modest positive open, while futures for the Nasdaq Composite signal the opposite. Weighing on tech stocks is the soft guidance issued last night by Nvidia (NVDA) and reports this morning that Apple (AAPL) has once again trimmed its iPhone forecast and is planning for close to flat production of the device this year. Before U.S. equities begin trading, we’ll get the second look at GDP for 1Q 2022 as well as another plateful of retailer earnings, with more on deck after today’s market close. What we learn on the demand front as well as the supply and inventory one will likely shape how equities look to end the week ahead of the weekend, when stocks are closed for Memorial Day.
There are no major economic data points for the international economy being published today.
The nonpartisan Congressional Budget Office (CBO) 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, CBO revised its GDP growth estimates to 2.2% and 1.5%, respectively. In terms of inflation, CBO shared its view that “roaring” inflation has topped and should cool each month to around 2% at some point in 2024. Baked into that forecast, CBO expects the Fed will hike its benchmark overnight interest rate to 1.9% by the end of 2022 vs. the prevailing market narrative of something more than 2.5%.
At 8:30 AM ET, we’ll get the usual weekly initial jobless claims but also the second GDP reading for the March quarter, which is expected to slip remain little changed at -1.3%. The GDP Price Index for the March quarter however is expected to increase to 8.0% vs. the initial figure of 7.1%. Investors and traders will want to see about other changes contained inside the updated report, including Real Consumer Spending and the PCE Price Index for the March quarter.
At 10 AM ET, April Pending Home Sales figures will be released, and they are expected to fall 2% MoM. Soon after at 10:30 AM ET, the weekly EIA Natural Gas Inventories data will be published and as we head into the summer swelter that means cranking the air conditioning, a lighter than expected inventory print could spur natural gas prices higher.
Stocks rose on Wednesday even after the minutes of the Federal Reserve’s May policy meeting showed the central bank is prepared to raise rates further than the market had anticipated. The Dow Jones Industrial Average closed 0.60% higher, the S&P 500 added 0.95% and the Nasdaq Composite advanced 1.51%. While growth concerns remained, a buy the dip mentality persisted, especially for small-cap stocks as evidenced by the 1.95% move yesterday in the Russell 2000. Including yesterday’s moves, here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: -11.61%
- S&P 500: -16.52%
- Nasdaq Composite: -26.91%
- Russell 2000: -19.87%
- Bitcoin (BTC-USD): -38.30%
- Ether (ETH-USD): -52.00%
Stocks to Watch
Before trading kicks off for U.S.-listed equities, 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 expected to report their quarterly results.
Bloomberg reports Apple (AAPL) is planning to keep iPhone production flat in 2022, asking suppliers to assemble roughly 220 million iPhones vs. market forecasts that call for closer to 240 million units.
Nvidia (NVDA) reported its April quarter revenue soared 46.4% YoY to $8.29 billion, besting the $8.09 billion consensus, while EPS for the quarter clocked in at $1.36, $0.07 per share ahead of the consensus forecast. For the current quarter, factoring in roughly $500 million in lost revenue due to Russia and China’s covid lockdowns, Nvidia sees revenue in the range of $7.94-$8.26 billion. Networking products are still supply constrained though improvement throughout the rest of the year is expected, but Gaming revenue is expected to decline in the July quarter and the absence of Russia is estimated to have a $100 million revenue hit to Data Center in the current quarter. The company also shared that it has increased and extended its share repurchase program to a total of $15 billion through December 2023.
Splunk (SPLK) reported better than expected April quarter results for both its top and bottom lines, and guided revenue for the current quarter and its fiscal year ahead of consensus expectations. For the full-year, Splunk now sees $3.30-3.35 billion in revenue vs. the $3.28 billion consensus.
While April quarter revenue booked by Guess? (GES) rose 14% YoY, topping the consensus forecast, EPS for the quarter came up shy of the $0.29 consensus. For the current quarter, Guess? sees revenue growing ~1%, suggesting $635.3 million vs. the $641.8 million consensus.
April quarter revenue and EPS at Williams-Sonoma (WSM) topped consensus expectations as comparable brand revenue rose +9.5% YoY with double digit gains at and Pottery Barn. The company reiterated its expectations of FY23 performance to be in-line with its long-term financial guidance of mid-to-high single-digit annual net revenue growth, increasing revenue to $10 billion by 2024.
Twitter (TWTR) shares moved higher in after-hours trading following a SEC filing in which Elon Musk commits to provide an additional $6.25 billion in equity financing to fund a portion of the Merger Consideration by amending and restating the Amended Equity Commitment Letter, dated as of May 4, 2022, to increase the aggregate principle amount of the equity commitment thereunder to $33.5 billion,
No initial public offerings (IPOs) are expected to price this week. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & 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 Workday (WDAY) are slated to report their latest quarterly results. Investors should remain on watch for companies that pre-announce their March quarter results. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Friday, May 27
- US: Personal Consumption and Income – April
- US: Michigan Sentiment Index (Final) – May
Thought for the Day
“A market downturn doesn’t bother us. It is an opportunity to increase our ownership of great companies with great 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.