Mid-Week Market Minute 2.21.24

Walmart, Home Depot Earnings Beat Expectations; Mortgage Applications Fall

Stocks moved lower in the early stages of this holiday-shortened trading week. On Tuesday, investor’s saw earnings results from both Walmart (WMT) and Home Depot (HD). Shares of Walmart moved higher on Tuesday after posting an impressive revenue beat bolstered by double-digit growth in e-commerce sales. Shares of Home Depot (HD) moved lower despite beating both earnings and revenue estimates. Despite a strong quarter, forward guidance came in a bit light of Wall Street’s expectations. Following the release, Home Depot’s CFO noted they’ve seen a dip in demand over the past year as consumers returned to more typical spending patterns. 

All eyes will be on NVIDA (NVDA) on Wednesday as the AI darling is set to report earnings after the bell. Shares of NVIDIA have rallied more than 225% over the past year, and the company now is the fifth largest in the U.S. by market cap. With expectations through the roof, anything short of a blow-out quarter will likely put downward pressure on the stock in the near-term.

With earnings season winding down, investors once again will shift their attention to the Federal Reserve with minutes from the January meeting due Wednesday afternoon. The bond markets have spent the first couple of months of this year adjusting their future interest-rate expectations lower. Futures markets now point toward just three or four rate cuts this year, with the first 25 bps rate cut projected to take place in June. For reference, heading into this year, the futures market expected as many as six rate cuts with the first taking place in March. 

Elsewhere, higher interest rates continue to weigh on housing, with mortgage applications falling 10.6% last week versus the prior week’s decline of 3.3%. Later this week, we’ll get a look at existing home sales as well as PMI data from S&P Global. In commodities, West Texas Intermediate (WTI) crude oil has stayed relatively range bound so far this year, currently trading around $77.51 per barrel despite concerns about production cuts from major suppliers and incidents of ship attacks in the Red Sea.

Source: GSAM, CNBC, JPMorgan

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