Market Snapshot
| Dow | 43239.50 | -193.62 | (-0.45%) | | Nasdaq | 18544.42 | -530.84 | (-2.78%) | | SP 500 | 5861.57 | -94.49 | (-1.59%) | | 10-yr Note |
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| | NYSE | Adv 891 | Dec 1866 | Vol 1.10 bln | | Nasdaq | Adv 1203 | Dec 3223 | Vol 7.73 bln |
Industry Watch
| Strong: Financials, Consumer Staples, Real Estate, Energy |
| | Weak: Utilities, Communication Services, Information Technology, Consumer Discretionary |
Moving the Market
--NVIDIA unable to hold pre-market gains; weakness in mega-cap space
--Tariff angst after President Trump says tariffs for Canada and Mexico will start March 4; and that an additional 10% tariff for China will go into effect same day
--Several Fed officials suggest Fed not in a hurry to cut rates
--Festering growth concerns
| Closing Stock Market Summary
27-Feb-25 16:20 ET
Dow -193.62 at 43239.50, Nasdaq -530.84 at 18544.42, S&P -94.49 at 5861.57
[BRIEFING.COM] Today did not turn as envisioned when NVIDIA (NVDA 120.15, -11.13, -8.5%) was trading nearly 3.0% higher in pre-open action following its earnings report. Actually, it was a starkly disappointing day for a stock market that appears to be in a corrective phase that has canceled the success of buy-the-dip approaches and has fueled the unwinding of momentum trades. In turn, it is a corrective phase that has been triggered by inflation worries and growth concerns rooted in tariff proposals and efforts to cut government spending.
Those attributes were all on display today and were wrapped up in the following developments:
- Disappointing price action in NVIDIA (NVDA 120.15, -11.13, -8.5%), which rolled over quickly after the start of trading
- President Trump's announcement that tariffs for Canada and Mexico will start March 4; and that an additional 10% tariff for China will go into effect the same day. That followed yesterday's indication that a 25% tariff for the EU will be announced soon.
- Comments from Kansas City Fed President Schmid (FOMC voter), Cleveland Fed President Hammack (non-FOMC voter), and Philadelphia Fed President Harker (non-FOMC voter), all of whom in one way or another suggested the Fed isn't in a hurry to lower the fed funds rate
- Festering growth concerns, fueled by the jump in weekly initial jobless claims and the pending home sales index hitting a record low in January
- Month-end activity
The S&P 500, which climbed above 6,000 yesterday, fell below 5,900 today. The mega-cap cohort was mostly responsible for the setback, which turned into a broader affair when selling in the mega-cap space picked up in the afternoon trade. The Vanguard Mega-Cap Growth ETF (MGK) declined 2.6%.
That weakness undercut the market cap-weighted indices to a larger degree. The equal-weighted S&P 500 fell 0.9% today. Notably, the S&P 500 financial (+0.6%), energy (+0.5%), real estate (+0.4%), and consumer staples (+0.02%) sectors finished higher in a down tape painted by the overbearing brush stroke of the information technology sector (-3.8%), which is the market's most heavily-weighted sector.
The Nasdaq Composite for its part dropped 2.8% and is now down 8.1% from the all-time high it reached in December. The Russell 2000 was down 1.6% and is now down 13.3% from its November high.
The Philadelphia Semiconductor Index, feeling the weight of losses in NVIDIA and related stocks, plummeted 6.1% today and is now down 21.0% from the all-time high it hit in July, which puts it in bear market territory (generally defined as a pullback in excess of 20% from a prior high).
The Dow Jones Industrial Average had been up as many as 451 points, but finished comfortably below the unchanged line. It still holds a 1.6% gain for the year, but it stands alone among the major averages as a year-to-date winner. With today's loss, the market cap-weighted S&P 500 turned negative for the year (-0.3%), joining the Russell 2000 (-4.1%), Nasdaq (-4.0%), and the S&P Midcap 400 Index (-1.8%) in negative territory.
Reviewing today's economic data:
- Initial jobless claims for the week ending February 22 increased by 22,000 to 242,000 (Briefing.com consensus 220,000). Continuing jobless claims for the week ending February 15 were 1867K (prior revised to 1867K from 1869K)
- The key takeaway from the report is that initial jobless claims reached their highest level since early December, which will add to the market's festering concerns about a slowdown in growth.
- The second estimate for Q4 GDP was 2.3% (Briefing.com consensus 2.3%; prior 2.3%) while the second estimate for the Q4 GDP Deflator was 2.4% (Briefing.com consensus 2.2%; prior 2.2%).
- The key takeaway from the report is that the growth was driven largely by consumer spending and government spending, but with targeted efforts by the Trump administration to cut government spending and to implement tariffs, there will be concerns about GDP growth decelerating in coming quarters due to less of a contribution from consumer spending and government spending.
- January Durable Goods Orders were up 3.1% (Briefing.com consensus 1.8%; prior revised to -1.8% from -2.2%). Excluding transportation, durable goods orders were flat (Briefing.com consensus 0.4%; prior revised to 0.1% from 0.3%).
- The key takeaway from the report is that nondefense capital goods orders, excluding aircraft -- a proxy for business spending -- logged a healthy 0.8% increase in January, offsetting the headline disappointment of an unchanged reading for durable goods orders, excluding transportation.
- January Pending Home Sales declined 4.6% (Briefing.com consensus -0.8%) following an upwardly revised 4.1% decline (from -5.5%) in December.
- The key takeaway from the report is that pending home sales hit their lowest level on record going back to 2001.
Friday's economic calendar includes:
- January Personal Income (Briefing.com consensus 0.3%; prior 0.4%), Personal Spending (Briefing.com consensus 0.2%; prior 0.7%), PCE Price Index (Briefing.com consensus 0.3%; prior 0.3%), and Core-PCE Price Index (Briefing.com consensus 0.3%; prior 0.2%)
- January Adv. Intl. Trade in Goods (prior -$122.1B), Adv. Retail Inventories (prior -0.3%), and Adv. Wholesale Inventories (prior -0.5%)
- February Chicago PMI (Briefing.com consensus 41.2; prior 39.5)
Losses continue to mount
27-Feb-25 15:30 ET
Dow -164.73 at 43268.39, Nasdaq -435.36 at 18639.90, S&P -77.62 at 5878.44
[BRIEFING.COM] The losses are mounting with the closing bell still roughly a half hour away. As the losses mount, Treasuries are starting to fetch a safe-haven bid; meanwhile, interest in hedging for further downside risk is picking up, evidenced by the uptick in the CBOE Volatility Index (20.78, +1.68, +8.8%). The S&P 500 has dropped below 5,900.
The 2-yr note yield is at 4.07%, down from today's high of 4.11%, and the 10-yr note yield has slipped to 4.28%, down from today's high of 4.31%.
Selling activity today has been influenced by several factors:
- Disappointing price action in NVIDIA (NVDA 122.47, -8.81, -6.7%)
- President Trump's announcement that tariffs for Canada and Mexico will start March 4; and that an additional 10% tariff for China will go into effect the same day
- Comments from Kansas City Fed President Schmid (FOMC voter), Cleveland Fed President Hammack (non-FOMC voter), and Philadelphia Fed President Harker (non-FOMC voter), all of whom in one way or another suggested they aren't in a hurry to lower the fed funds rate
- Festering growth concerns, fueled by the jump in weekly initial jobless claims and the pending home sales index hitting a record low in January
- Month-end activity
Mega-cap stocks take another leg lower
27-Feb-25 15:00 ET
Dow -27.98 at 43405.14, Nasdaq -306.66 at 18768.60, S&P -47.16 at 5908.90
[BRIEFING.COM] The S&P 500 hit new lows of the session (5,897) in the last hour, paced by stepped-up selling interest in the mega-cap space.
The Vanguard Mega-Cap growth ETF (MGK) is down 1.5% and trading near its lows of the day. The pressure applied by the mega-cap space was too much to bear for the broader market, which saw all the indices retreat into negative territory in the last hour.
That included the Dow Jones Industrial Average, which had been up as many as 451 points at its high this morning.
There wasn't a news catalyst for the leg lower in the mega-cap stocks, which suggests it could be related to month-end activity by accounts looking to pare their exposure to those widely-held names.
The S&P 500 is currently trading below its 50-day moving average (6,001), but still has some cushion before a test of the 200-day moving average (5,716) would come into play.
S&P 500 slips as Teleflex, SMCI, and Viatris lead declines; WBD surges on earnings
27-Feb-25 14:30 ET
Dow +74.64 at 43507.76, Nasdaq -275.53 at 18799.73, S&P -37.14 at 5918.92
[BRIEFING.COM] The S&P 500 (-0.62%) along with its counterparts has slipped to lows in recent trading, now down more than 37 points.
Briefly, S&P 500 constituents Teleflex (TFX 138.09, -39.54, -22.26%), Super Micro Computer (SMCI 43.71, -7.40, -14.48%), and Viatris (VTRS 9.71, -1.52, -13.57%) pepper the bottom of the standings. TFX slips more than 22% amid plans for major restructuring, share buyback, and BIOTRONIK acquisition, while SMCI falls despite revealing that its matter with the SEC is now closed, with VTRS dipping on underwhelming earnings and guidance.
Meanwhile, Warner Bros. Discovery (WBD 11.48, +0.98, +9.39%) is outperforming following earnings.
Gold drops as stronger dollar weighs on prices
27-Feb-25 14:00 ET
Dow +236.49 at 43669.61, Nasdaq -144.66 at 18930.60, S&P -6.20 at 5949.86
[BRIEFING.COM] The Nasdaq Composite (-0.76%) is down about 145 points this afternoon, trading near the middle of today's range.
Gold futures settled $34.70 lower (-1.2%) to $2,895.90/oz, pressured by gains in the greenback.
Currently, the U.S. Dollar Index is +0.6% higher to $107.16.
eBay's soft guidance spurs profit-taking today as it contemplates potential tariff impacts (EBAY)
Mirroring the dynamics from last quarter, despite another upbeat performance in Q4, eBay (EBAY -4%) is selling off today. The e-commerce auction platform registered a decent-sized earnings beat on in-line revenue growth. However, macroeconomic headwinds, including cumulative inflationary pressures and elevated interest rates, continue to cloud near-term demand. Meanwhile, potential tariff impacts add another wrinkle to the story. Combining these with EBAY's ongoing U.K. transformation, rolling out Managed Shipping and no selling fees, which is creating additional headwinds, the result is downbeat Q1 revenue guidance, enough to trigger meaningful selling pressure today, particularly following 52-week highs reached during yesterday's session.
- Q4 results were still sound. EBAY posted its eighth consecutive earnings beat, expanding its bottom line by 17% yr/yr to $1.25. Revenue growth did slow down from the +3.0% posted in Q3, crawling just 0.7% higher yr/yr in the quarter to $2.58 bln. Still, it was enough to edge past consensus. Similarly, GMV reached the high end of EBAY's $18.9-19.3 bln forecast, as growth accelerated by 2 pts sequentially to 4% yr/yr on an as-reported basis. Meanwhile, active buyer growth remained at 1% yr/yr, reaching 134 mln.
- Focus Categories continued to underpin EBAY's solid GMV growth in Q4, boasting a +6% bump yr/yr, nearly 6 pts faster than the company's core categories. Focus Categories include many items that are hard to find on other e-commerce platforms, such as trading cards that carry authentication and a massive number of motor parts and accessories. Both subcategories drove Focus Category growth in Q4, with trading card volumes accelerating to double-digit growth.
- Gen AI also supported EBAY's positive revenue growth in the quarter. EBAY has been increasing GPU capacity to assist sellers in listing items more easily by auto-generating descriptions based on photos. Additionally, advertising growth reached nearly 12% in Q4, propped up by an acceleration in first-party advertising as sellers lean on Promoted Listings to drive sales.
- However, 2025 is shaping up to be a bumpier year for EBAY. The company is currently overhauling its offering in the U.K., weighing on its take rate on a yr/yr basis in Q1. Furthermore, economic challenges are not abating in the U.K. and Germany, which remain a drag on EBAY's International GMV growth. Also, tariffs are adding a layer of stress. Management mentioned that it has modeled for a range of tariff outcomes in its guidance, potentially prompting a more conservative outlook.
- EBAY expects Q1 adjusted EPS of $1.32-1.36, revs of $2.52-2.56 bln, and GMV of $18.3-18.6 bln, representing FX-neutral yr/yr growth of flat to +1%, a significant drop from Q4. For the year, EBAY does not expect conditions to improve drastically, targeting low-single-digit GMV growth on an FX-neutral basis.
Bottom line, Q4 results were solid, but guidance clouded encouraging points from the quarter. EBAY is gearing up for potentially harmful tariff effects while already facing economic hurdles in the U.K. and Germany and overhauling its platform in the U.K. While EBAY may be guiding too conservatively, investors are not taking chances, taking profits off the table as they wait for the dust to clear.
Snowflake's flurry of new products and AI advancements help drive strong Q4 results (SNOW)
Two weeks ago, Datadog (DDOG) issued downside Q1 and FY25 guidance, creating concern that enterprises were scaling back on their data analytics spending while also souring investor sentiment for competitor Snowflake (SNOW). In fact, since DDOG's soft guidance, shares had plunged lower by about 14%, but SNOW is thawing out today following the company's strong Q4 results and bullish outlook for FY26. With product revenue growing by a healthy 28% yr/yr to $943.3 mln in Q4, easily beating SNOW's guidance of $906-$911 mln, and with SNOW's FY26 product revenue forecast of $4.28 beating expectations, it's evident that those DDOG-fueled concerns about slowing consumption were mostly unfounded.
SNOW also announced that CFO Michael Scarpelli plans to retire once a successor is in place. That news comes as a surprise, especially since SNOW has plenty of momentum behind it right now, but investors are taking the development in stride. It seems that the building excitement surrounding SNOW's new products, including Snowpark, which contributed 3% of total FY25 revenue, and its AI advancements are taking the sting out of the CFO retirement news.
- On that note, SNOW noted that it now has over 4,000 customers using its AI and machine learning technology on a weekly basis, up from 3,200 last quarter. Cortex AI, which enables customers to implement GenAI into SNOW's platform, is gaining significant traction. After announcing a partnership with Anthropic last quarter, allowing its large language models (LLMs) to be available within Cortex AI, SNOW announced another major partnership last night. Specifically, the company has expanded its partnership with Microsoft (MSFT), opening the door for SNOW's customers to access OpenAI's LLMs through its platform.
- Meanwhile, SNOW's core data warehouse business is holding up quite well despite the macroeconomic uncertainty. CEO Sridhar Ramaswamy commented that the core business is very strong and that the company is "hitting on more and more multi-product adoption." This is evident in the impressive net revenue retention rate of 126%.
- On the cost side of the equation, SNOW continues to focus on improving efficiency by removing redundant management layers and by centralizing teams. The company's efforts are paying off as Q4 non-GAAP operating margin expanded by three percentage points qtr/qtr to 9%, comfortably beating its guidance of 4%.
- The main blemish is SNOW's 1Q26 product revenue guidance of $955-$960 mln, which fell just short of expectations. However, the company does have a tendency of offering conservative guidance, so investors don't seem overly concerned about the downside outlook.
Overall, it was another strong performance from SNOW, easing fears that slowing consumption trends and rising competition -- particularly from privately held Databricks -- are taking a toll on its business. To the contrary, new product innovations, especially around AI, are reigniting the company's growth engine.
Salesforce heads a bit lower despite big EPS beat; provided weak guidance for Q1 and FY26 (CRM)
Salesforce (CRM -2%) is heading a bit lower today despite bouncing back with a big EPS beat in Q4 (Jan) following a rare miss in Q3 (Oct). There also was some disappointment because analysts had been forecasting Q4 would be CRM's first-ever $10 bln revenue quarter. CRM was very close as revenue grew 7.6% yr/yr to $9.99 bln, but CRM on the call is rounding up and calling this its first $10 bln quarter. Regardless, the top line was still a bit light.
- The guidance was another problem area as CRM guided to EPS and revenue shortfalls for both Q1 (Apr) and the full fiscal year (FY26). CRM sees Q1 revs at $9.71-9.76 bln, which was below analyst expectations. In fairness, the US dollar has strengthened considerably since its last earnings call. As such, CRM expects an incremental $200 mln headwind to FY26 revenue. Also, CRM expects its professional services business to continue to be a headwind to growth this year.
- Current Remaining Performance Obligation (cRPO) is a metric that investors watch closely. It grew +11% CC to $30.2 bln in Q4, which was above the +9% prior guidance. The outperformance was driven by strong performances in Data Cloud and AI and Slack. It also benefited significantly from strong early renewals. For Q1, CRM has guided to +10% CC growth in cRPO.
- From a geographic perspective, Americas revenue in Q4 grew 8% CC, EMEA grew 6-7% CC, and APAC grew 14% CC. CRM saw strong new business growth in LatAm, Japan and Canada, while parts of EMEA remain constrained. The US has been a bit weak, but CRM said the US saw some stabilization in Q4. From an industry perspective, Health and Life Sciences, Communications and Media, both performed well, while Tech and Manufacturing, Automotive and Energy were more measured.
- CRM talked a lot on the call about its recent successful launch of Agentforce, which combines the features of Salesforce with AI agents working alongside humans in a digital workforce with unrivaled speed. Just 90 days after it went live, CRM already has 3,000 paying Agentforce customers. CRM is seeing customers deploy Agentforce across every industry.
Overall, this was a solid quarter and we'll call it CRM's first-ever $10 bln quarter, an important milestone. The strong EPS upside and the impressive cRPO number were the highlights. It was also good to hear that the US is stabilizing. The guidance was a letdown for both Q1 and FY26, although it sounds like FX headwinds played a role. Another takeaway was management being very excited about Agentforce. CRM describes it as the next evolution of Salesforce and its early success is encouraging.
NVIDIA runs into selling pressure as Q4 outperformance fails to meet sky-high expectations (NVDA)
After heading modestly higher out of the gate today, NVIDIA (NVDA -3%) quickly encountered moderate selling pressure. The AI titan and GPU designer largely delivered what the market has come to expect, exceeding bottom-line estimates handily and posting top-line upside within the $1.0-1.5 bln range, growing total revenue by 77.9% yr/yr to $39.33 bln. However, NVDA failed to return to the $2.0 bln cadence beat registered last quarter and throughout FY24, despite the sizeable step-ups in AI investments from hyperscalers, which plan to allocate more than $300 bln combined toward the technology this year. Still, NVDA projected Q1 (Apr) revenue above consensus, targeting $42.14-43.86 bln, a positive change from its in-line guidance last quarter and a sign that fears over the China-based AI firm DeepSeek wiping out future GPU demand may have been overblown.
- What has not changed is the steadfast demand for all things AI. NVDA's Data Center revenue, which houses most AI-related sales, surged by 93% yr/yr and 16% sequentially, similar to last quarter's stats. Blackwell (NVDA's flagship AI GPU platform) posted $11.0 bln in sales during Q4, well above its initial several billion-dollar estimate issued in Q2 (Jul) and representing over a quarter of consolidated revenue, supported by large cloud service providers.
- Blackwell was architected for reasoning AI models, such as Open AI o3, DeepSeek R1, and Grok 3, which can require 100x more compute per task compared to a one-shot inference where a model must perform just one task. As a result of the incredible uptick in power needed, NVDA mentioned that it would be common for clusters (a group of servers spread over one or many data centers) to start with 100,000 GPUs or more and has already begun shipments for multiple AI infrastructures of this size.
- Geographically, NVDA's sequential Data Center growth was strongest in the U.S. due to its ramp of Blackwell. Still, other countries are pouring billions into AI. In China, the situation is noticeably different. Management noted that sales in the region stayed around half where they were before the onset of export curbs. NVDA expects shipments to remain roughly unchanged going forward.
- Like NVDA's core Data Center segment, Automotive revenue growth was white hot, leaping by 103% yr/yr and 27% sequentially as OEMs continue implementing self-driving and safety systems. Conversely, Gaming revenue fell by 11% yr/yr and 22% sequentially, primarily due to supply constraints. NVDA anticipates robust sequential growth in Q1 as GPU supplies improve. Lastly, Professional Visualization revs inched 10% higher yr/yr and 5% sequentially supported by AI-powered design, simulation and engineering.
NVDA's Q4 report further magnified the exceptional demand for AI. However, the company's tremendous numbers over the past few years have put it in a league of its own, making it crucial to deliver significant outperformance each quarter, especially following Big Tech's considerable AI spending commitments this year. By not delivering a wider sales beat and projecting Q1 revs even higher, investors are booking additional profits today, pushing the stock to potential support at its 200-day moving average (126.60).
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