Markets Slip This Hump Day; NVDA, CSCO Beat
The Dow spent all day bobbing back and forth into the green, while the other three indices spent the entire session under water. Stronger Retail Sales than expected gave a signal to the Fed that the flames of inflation have not yet been tamped out. Target’s TGT big miss on Q3 earnings this morning sent the stock down -13%, and the entire Retail sector down somewhat with it. The blue-chip index is now modestly in the green over the past five days, but still +11% over the past month.
The S&P 500 closed -0.83% on the day, still up more than +1% from last week, while the Nasdaq dumped -1.54% on the day but remains above +2% over the past five days. The small-cap Russell 2000 dropped nearly -2% today, giving back almost all its gains from this time last week. Smaller companies might be flapping in the wind in this type of trading weather, which may explain the relative strength of the Dow, led by McDonald’s MCD and Home Depot HD today.
Earlier today, we saw October reads for Industrial Production and Capacity Utilization — both of which came in notably lower than expectations: -0.1% swings to a negative from the consensus +0.1%, and flipped from the previous month’s downwardly revised +0.1%. Year over year, Industrial Production is +3.3%, significantly down from September’s revised-downward +5%. This is the smallest increase in these production numbers since January of this year.
Capacity Utilization reached +79.9% on its headline — lower than the +80.4% we were looking for, and down from the downwardly revised +80.1% for September. It’s the lowest print since June but within median levels year to date. The operating rate was -1.2% in Utilities and -0.5% in Mining, but the biggest piece of this pie is manufacturing, making up 71 of 89 industries.
NVIDIA NVDA shares are trading +3% on the company’s reported earnings miss after the closing bell today: 58 cents share is worse than the 70 cents in the Zacks consensus, though revenues of $5.93 billion and Gross Margins at +66% were both higher than projected. NVIDIA’s Data Center also outperformed expectations, to $3.83 billion from $3.72 billion in the quarter, on supply chain and inventory issues — not to mention slippage in overall Gaming clearing through the system.
Cisco Systems CSCO also posted Q3 earnings results after the bell, and shares are up +5% on the news: earnings of 86 cents per share beat consensus by 20 basis points (bps), and sales of $13.63 billion in the quarter. Gross Margins gained +2% on improvements in supply chain issues, and perhaps on China’s reopening. The company also has plenty of inventory backlog to work through; the conference call will likely address these matters.
Tomorrow brings us Housing Starts/Building Permits, a new Philly Fed survey for November and, of course, Initial and Continuing Jobless Claims. We also look toward Q3 earnings for Macy’s (M) and Palo Alto Networks (PANW) — one before the market opens and one after the closing bell. We continue to root for cooler economic data and trimmer guidance from reporting companies — the better to keep the Fed from raising rates another 75 bps a month from now.
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Target Corporation (TGT) : Free Stock Analysis Report
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