The S&P 500 ended Wednesday flat, with Nvidia shares slipping nearly 1% ahead of the company's highly anticipated earnings report. Investors also assessed disappointing results from Target.
The broad index closed little changed at 5,917.11, while the Dow Jones Industrial Average gained 139.53 points, or 0.32%, to settle at 43,408.47. The Nasdaq Composite lost 0.11% to close at 18,966.14.
"Jitters over Nvidia's earnings and climbing political tensions are worrying investors," said Ryan Detrick, chief market strategist at Carson Group. "But, let's not forget that stocks are still having a historic year and the economy isn't showing any major signs of a slowdown."
All eyes are on artificial intelligence darling Nvidia. The results could hold more significance than some key economic reports given the chipmaker's $3.6 trillion market capitalization, and they could set the tone for the market for the rest of the week. Investors will search for details on demand for its Blackwell AI chips, which CEO Jensen Huang last month characterized as "insane."
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Investors have eyed the report as a potential catalyst to reaccelerate the market for the rest of the year, following a fade in the big postelection rally that boosted the major benchmarks to new highs. Stocks struggled last week as Federal Reserve Chair Jerome Powell signaled that the central bank is not in a hurry to cut rates. Mounting geopolitical tensions between Russia and Ukraine also spooked markets Tuesday.
"Like most investors, we'll be closely watching NVIDIA's earnings report today for any clues on how AI spending is coming in," wrote Wolfe Research's Chris Senyek in a Wednesday note. "We see any negative news flow or disappointing spending trends as one of the key risks that could delay or even reverse a melt-up into year end."
In other news, retailer Target slumped 21% after posting its biggest earnings miss in two years and cutting its full-year guidance due to softening discretionary demand and cost pressures.
Money Report
The disappointment pressured other key retail stocks, with the SPDR S&P Retail ETF (XRT) down nearly 1%. Discount retailers slid. Dollar Tree tumbled 2.6%, while Dollar General fell 4.2%. Five Below declined 1.7%. E-commerce giant Amazon slipped almost 1%.
Comcast shares added 1.6% as the media company announced plans to spin off its cable networks, including MSNBC and CNBC. The separation is expected to take roughly a year. Comcast first hinted at a potential split during its October earnings call.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
S&P 500 closes little changed
The S&P 500 closed little changed at 5,917.11, while the Dow Jones Industrial Average gained 139.53 points, or 0.3%, to settle at 43,408.47. The Nasdaq Composite lost 0.1% to close at 18,966.14.
— Samantha Subin
JPMorgan hikes Salesforce price target
JPMorgan sees more upside ahead for Salesforce, citing its ability to continue operating well amid a tough backdrop for software companies.
Analyst Mark Murphy lifted his price target by $30 to $340, now implying upside of 5.1% over Tuesday's close. Murphy also reiterated his overweight rating.
"We maintain our view that Salesforce operates a business model that is bending, but not breaking, even within a challenging macro that is affecting all software companies," he wrote to clients. "We continue to see eventual upside from current levels as the company pivots to an efficiency playbook and balances slower growth with profitability and [free cash flow] generation while infusing Generative AI capabilities into its clouds."
Salesforce shares have jumped nearly 23% in 2024, building on last year's rally of 98.5%. If 2024 ends in the green, it would mark the stock's seventh winning year of the last eight.
— Alex Harring
'Significant corrections' followed stock markets this stretched in the past, Deutsche Bank says
The stock market has always pulled back when valuations are stretched as they are now, according to Deutsche Bank macro strategist Henry Allen in a note to clients this week.
"[T]urning points can happen quickly, and … when valuations are stretched to start with, there can be limited scope for further gains," Allen noted. "[E]xamples of high returns through history have often been followed by sizeable reversals."
The bank cited lofty current readings in the Cyclically Adjusted Price-to-Earnings (CAPE) ratio developed by economist Robert Shiller, arguing that "the CAPE ratio for the S&P 500 has only been higher on two other occasions in the last century" than it is today.
During the dot-com bubble of the late 1990s and the period before the Global Financial Crisis in 2008, "there was little scope for further gains since valuations were already so stretched to start with, and they were each followed by a significant correction," Allen wrote. "Indeed, on both the occasions the CAPE ratio has got as high as it is today, there was then a significant correction."
— Scott Schnipper
Lemonade shares pop on Morgan Stanley upgrade
Share of Lemonade jumped nearly 17% after being upgraded at Morgan Stanley to equal weight from underweight. The firm also raised its price target to $42 from $23, suggesting about 5% upside from Tuesday's close.
The insurance company held its investor day on Tuesday, outlining an "ambitious" goal of growing its business to $10 billion in premiums from $1 billion over the next few years, analyst Bob Huang wrote in a note Wednesday.
"More importantly, the company is charting a path to net profit positive exiting 2027, which is significantly more optimistic than us and the consensus," he said.
The stock also hit a 52-week high on Wednesday.
— Michelle Fox
Key facts ahead of Nvidia's earnings report, according to Oppenheimer's sales desk
Nvidia earnings after the bell could serve as a monumental catalyst for the recently stalled postelection rally — and the stakes are high.
The chipmaker has continued to wow investors and multiply in value since the launch of ChatGPT in November 2022. In fact, the stock has not fallen on back-to-back earnings since the artificial intelligence chatbot's debut, Oppenheimer's sales desk notes.
The pressure is also high given the progressive narrowing in the magnitude of the earnings and revenue surprises over the past five quarters. The company topped revenue by 21% five quarters ago and by just 5% in the last quarter, Oppenheimer notes. The earnings beats have decelerated similarly.
— Samantha Subin
Fed Governor Bowman says inflation progress has 'stalled'
Federal Reserve Governor Michelle Bowman said Wednesday that progress on bringing inflation back to the central bank's goal has slowed.
"We have not yet met our inflation goal and, as I noted earlier, progress in lowering inflation appears to have stalled," Bowman said in remarks in West Palm Beach, Florida. "I see greater risks to the price stability side of our mandate, especially while the labor market remains near full employment, but it is also possible that we could see a deterioration in labor market conditions."
Recent data has indicated that the Fed has neared its 2% inflation target, though the all-items consumer price index nudged higher in October and the core rate indeed has held steady around 3.3% since August.
Inflation concerns caused Bowman to vote against the half-percentage-point interest rate cut in September, though she did vote for the quarter-point reduction earlier this month, which she would have preferred for the initial move. The policymaker said she approaches her role "in an independent way, relying on facts, analysis, my own experience and judgment," and with the inflation mandate in mind.
"In some cases, this approach has led me to depart from the views of my colleagues," she said.
— Jeff Cox
Williams-Sonoma, AppLovin, Target among stocks making biggest midday moves
Check out the companies making headlines in midday trading:
- Williams-Sonoma — The home goods retailer soared about 29% after beating expectations on both lines for the third quarter and raising full-year guidance. Williams-Sonoma earned $1.96 per share on $1.80 billion in revenue, while analysts surveyed by LSEG had anticipated just $1.78 in earnings per share and $1.79 billion in revenue.
- AppLovin — Shares popped 4.8%. Piper Sandler initiated coverage of the mobile app developer with an overweight rating. The firm set a price target implying the stock has upside of nearly 25% ahead, even after it already surged more than 700% in 2024.
- Target — Shares plunged more than 21% after the big-box retailer disappointed on third-quarter earnings and revenue estimates and cut its full-year guidance, just three months after raising that forecast. Target reported only a slight uptick in customer traffic as CEO Brian Cornell noted "lingering softness in discretionary categories."
— Pia Singh
Semiconductors slide
Semiconductor stocks slid in midday trading, with the VanEck Semiconductor ETF (SMH) falling 1.3%.
Nvidia, which is set to report after the close, was down 1.1%. Shares of Advanced Micro Devices and Broadcom were off 1.6% and 1.7%, respectively.
— Sarah Min
HSBC upgrades Trip.com shares to buy
Shanghai-based travel agency company Trip.com Group is a winner despite China's macro uncertainty, according to HSBC.
Analyst Parash Jain upgraded the stock to buy from hold. He also raised his price target on U.S.-traded shares to $75 from $65, implying shares gaining 19.5% from Wednesday's close.
Trip.com posted a post-Covid operating margin record of 34.4% in the third quarter. During the same period, the company also managed to raise its outbound hotel and air reservation volume, representing an increase in its market share.
Broader structural trends in China will also benefit the company, per Jain.
"Travellers from tier-one cities are travelling further abroad [and] citizens from lower tier cities are becoming emerging outbound travellers," Jain wrote in a Tuesday note. The "silver generation" is also beginning to travel more, he added.
"Collectively, we think these structural trends will not only help maintain higher growth but also improve platform utilisation during off-season periods, contributing to better economies of scale and operating efficiency," Jain said.
Shares are up 80% in 2024. The stock climbed 3.4% Wednesday.
— Hakyung Kim
Williams-Sonoma shares poised for best day since 2008 following earnings beat
Williams-Sonoma shares headed for their best day in more than a decade and a half after exceeding Wall Street's expectations for third-quarter earnings.
The Pottery Barn and West Elm parent's shares jumped more than 28%. If that holds through session close, it will mark the stock's best day since 2008, when it climbed more than 39%.
Wednesday's rally comes after the company issued stronger-than-expected earnings for the third quarter and hiked full-year guidance. Williams-Sonoma earned $1.96 per share on $1.80 billion in revenue, while analysts surveyed by LSEG had anticipated just $1.78 in earnings per share and $1.79 billion in revenue.
Shares are now up more than 74% in 2024.
— Alex Harring
Fed Governor Cook expects more rate cuts as inflation eases
Federal Reserve Governor Lisa Cook said Wednesday that she sees inflation continuing to ease while the labor market "remains solid" despite some recent signs of weakness.
Consequently, she expects the central bank to continue lowering its benchmark interest rate, though the path ahead is uncertain.
"Going forward, I still see the direction of the appropriate policy rate path to be downward, but the magnitude and timing of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks," Cook said in remarks at the University of Virginia.
While inflation, particularly at the core excluding food and energy, remains above the Fed's goal, she expects progress to continue as housing services prices, such as rent, slow their ascent.
— Jeff Cox
Nvidia leads Big Tech lower
Nvidia shares dropped more than 2% ahead of the company's third-quarter report, dragging other major tech stocks lower.
Amazon, Tesla and Alphabet shed around 2% each. Meta Platforms and Microsoft lost 1% and 1.6%, respectively. Netflix fell slightly, and Apple dipped 0.8%.
— Fred Imbert
Nvidia is the biggest drag on the S&P 500, Nasdaq Composite
Nvidia shares dropped 2.5% ahead of the artificial intelligence chipmaker's key earnings report after the bell.
The stock was the biggest drag on both the S&P 500 and Nasdaq Composite, and the fifth-worst performer by weighting in the Dow Jones Industrial Average.
By percent change, Target was the biggest laggard in the S&P 500. Shares declined about 21%.
— Samantha Subin
Oppenheimer steps to the sidelines on JPMorgan Chase
Oppenheimer is taking a breather on JPMorgan Chase after the banking giant's postelection rally.
The firm downgraded shares to perform from outperform in a Wednesday note while maintaining its price target of $241 on shares.
The banking sector's jump after President-elect Donald Trump's victory has propelled JPMorgan to more than a 9% gain month to date.
"In addition to the stock reaching our target … while most of the industry should see a steady rise in net interest income, JPM has guided to lower NII and this is what consensus expects," analyst Chris Kotowski wrote.
"It is admittedly 'in consensus' but it is for us hard to imagine the stock outperforming, especially from this level, when its key revenue line is declining as others rise," Kotowski added.
— Hakyung Kim
Stocks open little changed
Stocks opened little changed Wednesday as Wall Street braced for a key earnings report after the bell from Nvidia.
The Dow Jones Industrial Average gained 66 points, or 0.15%. The S&P 500 hovered near the flatline, while Nasdaq Composite edged down 0.1%.
— Samantha Subin
Citi downgrades Target following earnings miss
Citi sees more losses ahead for Target after the company posted its biggest earnings miss in two years.
The bank downgraded its rating on the stock to neutral from buy, and its updated price target reflects around 16% downside from Tuesday's close.
"Though 3Q may have had some unique challenges, we believe very poor results at TGT in 3Q (and an uninspiring outlook for 4Q) show TGT is likely losing share to WMT," analyst Paul Lejuez said in a Wednesday note. "With WMT's mkt share gains coming largely from higher income consumers (as they called out yesterday), TGT seems to be the one most at risk of losing additional share."
Lejuez added that Target may need to become "more promotional" to increase traffic and sales moving forward, which he believes creates more uncertainty around its performance for next year.
Shares plummeted more than 16% in the premarket on the heels of the call and the quarterly results. While the stock has fallen more than 1% over the past month, it has risen nearly 9% this year.
— Sean Conlon
Target, Dolby Laboratories among the names making moves before the bell
Here are some stocks making big moves in the premarket:
- Target — Shares plunged more than 17% after the Minneapolis-based retailer missed third-quarter earnings and revenue estimates and slashed its full-year guidance, just three months after raising that forecast. Target cited only a slight uptick in customer traffic and its CEO noted "lingering softness in discretionary categories."
- Nio — U.S. shares fell more than 2% after the Chinese electric vehicle maker posted lower-than-expected revenue for the third quarter. Nio sales totaled 18.67 billion yuan for the period, down 2.1% year over year. Analysts polled by FactSet were estimating 19.13 billion yuan.
- Dolby Laboratories — Shares soared nearly 15% after the audio technology company's quarterly results topped Wall Street estimates. Dolby earned 61 cents per share in its fiscal fourth quarter, above analysts' estimated 45 cents per share, according to FactSet. Dolby also raised its quarterly dividend by 10% to 33 cents per share, payable Dec. 10.
Read here for the full list.
— Sean Conlon
Mortgage activity picked up last week, MBA survey says
Mortgage activity picked up last week, according to the latest survey from the Mortgage Bankers Association.
Purchase applications were up 2% last week, the biggest since the week of Oct. 25. Refinancing applications rose 1.8%, which was the first increase in that category since September.
The survey could be a positive sign for home construction stocks. The SPDR S&P Homebuilders ETF (XHB) is down 8% over the past month.
— Jesse Pound
Bank of America double upgrades pet goods stock
The improving industry backdrop for pet products retailer Chewy is setting up the road for growth, according to Bank of America.
Analyst Curtis Nagle double-upgraded shares to buy from underperform. He also hiked his price target to $40 from $24, or 21.4% above Tuesday's close price.
Spending on pets has already bottomed and adoption trends have improved through the course of the year, according to Nagle. These positive trends, along with Chewy's earnings potential, make the stock an "easy bone to chew on," he wrote in a Wednesday note.
"Improving industry data should lead to accelerating topline trends and stronger earnings leverage for Chewy, which we think the Street is likely underestimating. … We think there is an opportunity for significant earnings growth in the coming years," Nagle added.
Shares jumped 4.6% Wednesday before the bell. Year to date, the stock is up around 39%.
— Hakyung Kim
Target plunges after guidance cut, biggest earnings miss in 2 years
Target shares plunged 20% after the retailer cut its full-year outlook and reported weaker-than-expected third-quarter results.
The company sees full-year earnings per share between $8.30 and $8.90. Previously, it had forecast a profit between $9 per share and $9.70 per share.
Target also reported third-quarter earnings of $1.85 per share. That is well below an LSEG estimate of $2.30 per share and its biggest bottom-line miss in two years.
— Fred Imbert
Deutsche Bank upgrades casino operator
Casino and hotel operator Gaming and Leisure Properties offers investors compelling returns with limited headwinds, according to Deutsche Bank.
Analyst Carlo Santarelli upgraded shares to buy from hold in a Tuesday note. He also notched his price target higher to $54 from $49, implying 8% upside potential from Tuesday's close.
Although shares are up just 1.8% in 2024, Santarelli believes the stock could offer returns in the mid- to high-teen level when combined with its dividend yield. He also cited a healthy balance sheet and strong pipeline despite an "uncooperative" interest rate backdrop.
"We believe the choppy domestic gaming environment lends to investors seeking exposure through more risk averse avenues, within which we believe GLPI firmly falls," Santarelli wrote.
— Hakyung Kim
European markets trade higher as investors assess geopolitical tensions
European markets traded higher early Wednesday as investors keep an eye on a spike in tensions in the Ukraine-Russia war.
The pan-European Stoxx 600 was 0.5% higher Wednesday morning, with all sectors in positive territory except for autos. The FTSE 100 was flat at the open before turning 0.2% higher after data showed U.K. inflation picked up sharply to a higher-than-expected 2.3% in October.
Global markets fell on Tuesday as investors reacted to Russia lowering the threshold for a nuclear strike, and after Ukraine used U.S.-made long-range ballistic missiles to attack Russian territory for the first time, stoking tensions between Russia and the West.
In the latest development, the U.S. closed its embassy in Kyiv on Wednesday, warning that it has "received specific information of a potential significant air attack."
— Holly Ellyatt
Stocks making the biggest moves after hours
Check out some of the companies making headlines in extended trading:
- Keysight Technologies — Shares added more than 8%. The electronics test and measurement equipment company's fiscal fourth-quarter results beat analysts' estimates on the top and bottom lines. Keysight also issued a rosy outlook for the current quarter, anticipating adjusted earnings ranging from $1.65 to $1.71 per share, while analysts polled by FactSet called for $1.57 in earnings per share.
- Dolby Laboratories — The audio technology company advanced 10% after its fiscal fourth-quarter earnings of 61 cents per share topped Street estimates of 45 cents per share, per FactSet. Dolby also increased its dividend by 10% to 33 cents a share.
- Powell Industries — The manufacturer of electrical equipment slipped almost 14%. Net new orders for fiscal 2024 came in at $1.1 billion, compared to $1.4 billion in the year-ago period. The company noted that the decline was largely due to the inclusion of three large megaprojects in Powell's oil and gas and petrochemical sectors in fiscal 2023.
Read the full list here.
— Brian Evans
Comcast is moving forward a plan to spin off its cable channels
Comcast is moving forward with a plan to spin off its cable channels including MSNBC and CNBC, according to a Wall Street Journal report on Tuesday.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
— Brian Evans
Stocks futures open little changed
Stock futures were little changed on Tuesday, with investors looking toward a key earnings report from Nvidia.
Futures tied to the Dow Jones Industrial Average ticked up 12 points, or 0.03%. S&P 500 futures hovered near the flatline alongside Nasdaq 100 futures.
— Brian Evans