Stock Market Week: Nvidia, Walmart, Home Depot; Investing Action Plan

February 16, 2024

5 minutes read

With the Dow and S&P 500 just off record highs, and the Nasdaq less than 3% below its November 2021 record, the stock market paused for a modest breather. The coming week is light on market-moving economic news. But Nvidia (NVDA) will headline the week’s earnings action, and positive guidance on artificial intelligence could stir the market’s current sweet spot.

Walmart (WMT), Home Depot (HD) and Toll Brothers (TOL) also report, along with miners BHP (BHP) and Rio Tinto (RIO), as well as Permian Basin oil producer Diamondback Energy (FANG).

Stocks To Watch: Look For Non-AI Leadership

AI plays have been white hot for the past year. But investors should also consider promising stocks in other sectors, looking for a diversity of leaders. Celsius Holdings (CELH), Weatherford International (WFRD), Lennar (LEN), General Motors (GM) and Shockwave Medical (SWAV) are all near buy points.

Energy drink maker Celsius has cleared some early entries. So has oilfield services play Weatherford, which is near an official breakout. Lennar has been trying to break out but faces rebounding mortgage rates. General Motors is a turnaround play, as traditional automakers come back into favor. Shockwave Medical is offering an aggressive entry after a long slide in late 2023.

Economic Calendar: Market Takes A Data Break

After a busy start to the year, the coming week will be light on economic data. But Wednesday’s release of minutes from the Jan. 30-31 Federal Reserve’s Open Market Committee meeting will be closely scrutinized. The market is hungry for any hints about the timing and extent of rate cuts and changes in balance-sheet tightening.

In addition, two indicators on Thursday morning will get heightened attention as investors look for confirmation that January’s weak retail sales report augured an economic slowdown. Initial jobless claims for the week through Feb. 17 are out before the market open, followed by S&P Global’s flash U.S. composite index for February, just after the starting bell.

Key Fed Inflation Rate Just Got Bad News; S&P 500 Fights Back As Rate-Cut Odds Sink

Semiconductors: Checking In On The AI Outlook

AI-chip maker Nvidia will release its Q4 results late Wednesday. Wall Street expects the company to earn $4.57 a share, up 419% year over year, on sales of $20.28 billion, up 235%, in the quarter ended Jan. 28. It likely will be Nvidia’s third straight quarter of triple-digit percentage growth in sales and earnings.

Investors will key in on guidance to see how long the data-center-based artificial intelligence boom will continue. Analysts currently expect Nvidia first-quarter earnings per share to soar 351% on a 203% sales gain. Nvidia stock is up nearly 50% this year on AI euphoria. One analyst called Nvidia’s Q4 report “the most important earnings in all tech year to date.”

Blue-Chip Radar: Big Week For Dow Retailers

Dow Jones retail giants Walmart and Home Depot report on Tuesday. FactSet sees earnings slips from both, but a rise in revenue for Walmart. That would be Walmart’s first earnings dip in six quarters. Both companies have implemented aggressive theft-prevention programs, so the level of “shrink” will be of central interest. Walmart is in a cup-base buy zone.

Toll Brothers Set For A Breakout, Earnings Due

Homebuilders continue to show strength, with Toll Brothers setting up a nine-week flat base ahead of its fiscal first-quarter report, due late Tuesday. Analysts project single-digit gains in EPS and sales. But how the company handles its outlook as the Federal Reserve pushes back expectations for interest rate cuts, will be carefully parsed. Investors will also be keen on further details regarding Toll’s shift to a broader range of housing types and price points.

Ore Miners: A Peek Into Global Metals Demand

The world’s largest mining stocks give operational updates in the coming week. BHP reports overnight on Monday, with Rio Tinto due early Wednesday. Both companies report in six-month intervals. Vale (VALE) reports on Thursday morning along with gold miner Newmont (NEM).

The economic backdrop has been tough for diversified miners. The industry leans heavily on China’s economy, which continues to struggle, while Europe is also in a funk. The group has posted a string of year-over-year earnings declines. Plus, the strong U.S. economy means a stronger dollar — a negative for prices of metals such as gold and copper.

Tuesday

Palo Alto Networks (PANW) reports fiscal Q2 financial results Tuesday amid high expectations for the cybersecurity firm. Adjusted EPS is expected to rise 24% to $1.30. Revenue will grow 17% to $2.29 billion, analysts estimate. Growth in cloud-based computer security services has offset slowing growth in the on-premises firewall appliance market.

Fluor (FLR), an energy and infrastructure engineering firm, is in a buy zone — but just barely — ahead of its Q4 report early Tuesday. FactSet analysts project a 33% rise in earnings, sharply below Fluor’s recent triple-digit pace. Views see revenue growth steady at around 11%. The report could provide insight into the outlooks for large-scale energy, mining and infrastructure spending.

Diamondback Energy reports after Tuesday’s close. An early shale-boom newcomer, its $26 billion deal for peer Endeavour on Feb. 12 made it part of the scramble to lock up Permian Basin production as the boom downshifts. Analysts expect a third straight drop in earnings and revenue, but will be anxious for details on the merger.

October’s ExxonMobil (XOM)-Pioneer Resources (PXD) merger aimed to boost Exxon’s output while holding actual, overall production effectively steady. Occidental Petroleum (OXY) notched down its Permian Basin spending for 2024, and is ratcheting up efforts offshore.

Wednesday

Etsy (ETSY), the online marketplace, reports Q4 earnings late Wednesday. Analysts expect earnings of 77 cents per share on $828 million in sales, according to FactSet. That would be a 2.5% year-over year sales increase and flat earnings. Etsy stock lost 32% last year amid intense competition. Shares have formed a cup base with an 89.58 buy point.

Thursday

Block (SQ), the parent of Square, reports Q4 earnings Thursday after the market close. Analysts see EPS of 59 cents, up 168% from a year earlier. Revenue will grow 22% to $5.69 billion, analysts predict. Other key financial metrics are gross merchandise volume and gross profit. Analysts project gross profit of $1.97 billion and GMV of $59.25 billion. Cash App growth also will be key for the digital payments firm.

Applied Optoelectronics (AAOI), a maker of fiber-optic gear used in data-center communications, reports Q4 earnings late Thursday. Analysts expect the company to break-even on an adjusted profit basis vs. a 19-cent loss a year earlier. Revenue is expected to climb 6% to $65.2 million. Shares are trying to break out. The stock pulled back Friday after briefly topping a cup-base buy point at 24.08.