Markets News, Aug. 23, 2023: Tech Stocks Boost Nasdaq, S&P 500 Ahead of Nvidia Earnings

24 Aug

As investors got ready for quarterly earnings from Nvidia (NVDA), the company at the center of this year’s AI surge, equities gained on Wednesday, with tech stocks setting the pace.

The S&P 500 gained 1.1% while the Nasdaq increased by 1.6%, or 215 points. Rising by 0.5% was the Dow Jones Industrial Average.

Wednesday saw a return to the month-long decline in Chinese stocks, with the Shanghai Composite dropping 1.3%. The performance of European stocks was somewhat better, with daily gains tempered after statistics revealed that the growth of the EU’s services sector had slowed for the first time since last year. Trading speculation that the European Central Bank (ECB) will stop hiking rates at its meeting next month resulted in higher prices for European bonds.

Yesterday’s stock market had a mixed day’s performance, with the Nasdaq modestly rising thanks to Big Tech. After credit rating agency S&P downgraded numerous U.S. banks, financials weighed on the S&P 500 and the Dow.

Dow Gains on Rebounding Tech Stocks

Tech stocks helped to Wednesday’s 0.5%, or 184 points, increase in the Dow Jones Industrial Average, which was expected to follow Nvidia’s quarterly earnings announcement.

Though the Dow’s best-performing company today, Merck & Co. (MRK), the pharmaceutical behemoth, increased by 3.8%.

Intel (INTC) followed closely behind, whose shares saw a 3.3% increase. Shares of Apple (AAPL) increased 2.2%, Microsoft (MSFT) gained 1.4%, IBM (IBM), Salesforce (CRM), and Cisco Systems (CSCO) also saw gains. Overall, the tech industry increased 1.9% today.

Following the announcement that Bryan Hanson, a former CEO of Zimmer Biomet, will take the helm of its soon-to-be-spun-off healthcare subsidiary, 3M (MMM) shares increased by 1.2%.

The stock of Nike (NKE) saw its ninth consecutive losing session as shares dropped 2.7%. Nike lost ground when sneaker retailer Foot Locker (FL) revealed that last quarter’s sales were down 9.4% year over year as a result of consumers making fewer discretionary purchases.

Shares of pharmaceutical company Johnson & Johnson (JNJ) dropped 0.9% after the share swap for spin-off Kenvue was completed. J&J has lost 4.6% of its value this week.

Nvidia Climbs Ahead of Hotly Anticipated Earnings

In advance of the release of its second-quarter results report, Nvidia (NVDA) stock increased by 3% on Wednesday.

After numerous analysts increased their price targets for the stock earlier this week in anticipation of its earnings after the bell, investors increased their optimistic wagers on Nvidia.

When Nvidia last reported, in May, its earnings and second-quarter sales forecast much exceeded analysts’ expectations, driving the stock up more than 20% the following day.

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Grab Shares Jump After Narrowing Losses on Cost-Cutting Moves

Grab (GRAB), a ride-hailing and e-commerce company located in Singapore, predicted a lesser loss for the year as cost-cutting measures had a positive impact on its bottom line.

The company, which has recently emerged as one of Asia’s largest technological startups, reported a net loss of $148 million in the second quarter, which was 74% lower than its loss in the same quarter last year. Revenue increased 77% year over year to $567 million, with deliveries accounting for more than double that amount.

The company’s subscription program, GrabUnlimited, saw an increase in subscriptions of 25% from the prior quarter and 43% from a year earlier. In comparison to non-subscribers, GrabUnlimited subscribers had retention rates that were, on average, twice as high and spent roughly four times as much on food delivery.

In contrast to earlier projections of $195 to $235 million, the company has revised its full-year view and now anticipates an operational loss of only $30 to $40 million.

The price of Grab shares increased by more than 10% on Wednesday. This year, they have increased by 15%.

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Midday Market Movers

Abercrombie & Fitch Co. (ANF): Shares of the apparel company gained 24% after it reported second-quarter earnings of $1.10 a share on $935 million in sales, blowing past analysts’ estimates of $0.17 per share on $842 million in revenue.

Williams-Sonoma Inc. (WSM): Shares of the furniture and home goods retailer gained 13% after it beat Wall Street’s second-quarter earnings estimate and raised its full-year operating margin forecast.

Netflix Inc. (NFLX): Shares of the streaming service gained more than 4% after research firm Antenna estimated it added 2.6 million subscribers in July, more than any other paid U.S. streaming platform. The company’s crackdown on password sharing caused new subscriptions to surge in June after months of declining subscriber numbers.

Nike Inc. (NKE): Shares of the sports apparel and shoe company fell more than 2% after footwear retailer Foot Locker (FL) cut its full-year guidance and reported a worse-than-expected decline in sales. Nike is on track for its tenth straight losing session, its longest losing streak since going public in 1980.

Victoria’s Secret & Co. (VSCO): The clothing and lingerie retailer’s shares fell more than 3% after several recent earnings reports highlighted the uncertain future retailers face as discretionary budgets and savings shrink.

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Lipstick Effect Spares Cosmetics Companies Retail’s Pain

Cosmetics are one bright spot in the otherwise depressing retail environment.

Beauty firms continue to report strong sales despite customers cutting down on discretionary spending due to higher pricing and rising interest rates.

In a disappointing earnings announcement yesterday, Macy’s (M) highlighted the tenacity of its beauty and cosmetics division. The “selective retail” division of luxury goods behemoth LVMH, where Sephora is located, experienced the company’s fastest growth in the first half of this year.

In its fiscal first quarter, e.l.f Beauty (ELF) recorded a 76% increase in revenue and profitability that were double what analysts had predicted.

According to the lipstick effect, people boost their spending on little luxuries like cosmetics during recessions even while they cut back on total spending. And the most recent earnings seem to confirm that idea.

The majority of cosmetics stocks have done well this year, particularly those targeted at the American market. In the past year, e.l.f Beauty has increased by 215%, and Ulta Beauty (ULTA), which releases earnings tomorrow after the bell, reached an all-time high in April.

As sales in China sputter, Estée Lauder (EL), a cosmetics company that is particularly vulnerable to the luxury and global markets, is trading at its lowest point in more than 4 years.


6 Replies to “Markets News, Aug. 23, 2023: Tech Stocks Boost Nasdaq, S&P 500 Ahead of Nvidia Earnings

  1. Next time I read a blog, I hope that it does not fail me as much as this particular one. I mean, I know it was my choice to read through, nonetheless I truly believed you would have something interesting to say. All I hear is a bunch of complaining about something you could possibly fix if you were not too busy looking for attention.
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