Coffee With Greta: Stocks Rise As February Ends
DJIA Futures: +46 (+0.1%)
SPX Futures: +4 (+0.1%)
NASDAQ Futures: +2 (+0.01%)
Good morning friends!
Futures are up slightly as traders brace for the final trading day of February.
Let’s get right to it!
February Comes To A Close
Today is the last day of February and the major indexes are on track to close out the month in the negative.
As of Monday’s close, the Dow Jones is down 3.5% for the month and negative for the year, the S&P 500 is down 2.3% for February, and the Nasdaq is down 1%.
Stocks pulled back in February after a strong rally at the end of December and into January.
Traders have remained on edge about inflation and the Fed’s rate hikes this month as new data came in hotter than expected.
But CME Group’s FedWatch Tool still shows over 75% of traders anticipating another 25 basis point hike at the March meeting.
Some Fed officials have been pushing for a 50 basis point move after the January CPI, PPI, and PCE price index all came in hot.
Target Slips On Weak Outlook
Target (TGT) shares are down 0.2% ahead of the open after beating Q4 expectations but issuing weak guidance.
Here’s how the retailer’s results compared to analysts’ expectations:
- EPS: $1.89 vs $1.40 expected
- Revenue: $31.4 billion vs $30.72 billion expected
Target’s profits were down 43% year over year.
But same-store sales rose 0.7%, topping expectations for a 1.6% decline.
Inventory levels dropped 3% year over year in Q4 as Target focused on stocking more high-frequency items like food and paper towels.
CEO Brian Cornell said, “We realized consumer spending habits have changed. So we took a pretty bold action and said, ‘We’re going to address inventory. We’re going to get our inventory levels right.’ We finished the year exactly where we wanted to be.”
Target expects comparable sales in 2023 to rangle from a low single-digit decline to a low single-digit increase and full-year EPS between $7.75 and $8.75.
That missed analysts’ expectations for earnings of $9.23 per share this year.
Cornell said, “I think we’re being appropriate with our guidance in this environment. We know inflation is still high — it’s been very stubborn. It’s still at a very high level. We know interest rates are rising. And we’re going to watch the consumer really carefully.”
Zoom Rallies On Earnings Beat
Zoom (ZM) shares are jumping 5.1% in premarket trade after beating fiscal Q4 expectations on the top and bottom line.
Here’s how the video chat company’s results compared to analysts’ expectations:
- Adjusted EPS: $1.22 vs $0.81 expected
- Revenue: $1.12 billion vs $1.10 billion expected
Revenue rose just 4% year over year, a dramatic slowdown from the rapid growth seen during 2020 and 2021.
Zoom expects growth to continue slowing this year.
The company forecast between $4.435 billion and $4.455 billion in revenue this year, implying 1.1% growth and missing analysts’ estimates of $4.6 billion.
Zoom forecast full-year adjusted EPS between $4.11 and $4.18, topping estimates of $3.66.
For fiscal Q1, the company sees adjusted EPS of $0.96 to $0.98 on revenue of $1.080 billion to $1.085 billion.
Coming Up: Consumer Confidence
Consumer confidence is expected to have improved in February.
The Conference Board releases its consumer confidence index at 10:00 a.m. ET today.
That index is expected to improve to 108.5 from 107.1 in January.
Traders will be monitoring the expectations index in that survey, which currently stands below 80 which often signals an impending recession.
The survey also includes an update on consumers’ inflation expectations, which ticked higher in January from December.
In Case You Missed It
- Pending home sales surged in January as mortgage rates dropped. The National Association of Realtors reported pending sales jumped 8.1% last month vs expectations for a 0.9% gain. It was the second straight monthly increase but pending sales were still down 24% year over year.