| | | Market Snapshot
| Dow | 43840.91 | +601.41 | (1.39%) | | Nasdaq | 18847.28 | +302.86 | (1.63%) | | SP 500 | 5954.50 | +92.93 | (1.59%) | | 10-yr Note | +25/32 | 4.23 |
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| | NYSE | Adv 1817 | Dec 835 | Vol 1.8 bln | | Nasdaq | Adv 2701 | Dec 1688 | Vol 8.3 bln |
Industry Watch
| Strong: Consumer Staples, Utilities, Industrials, Consumer Discretionary |
| | Weak: -- |
Moving the Market
-- Reacting to Personal Income and Spending for January, which includes the Fed's preferred inflation gauge (core-PCE Price Index); positive response to disinflation on a year-over-year basis, but month-over-month decline in real personal spending doesn't bode well for GDP forecasts
-- Mega caps turnaround from early weakness as indices hit session highs
-- Responding to tense meeting between President Trump, VP Vance, and President Zelenskyy at White House
| Closing Summary
28-Feb-25 16:30 ET
Dow +601.41 at 43840.91, Nasdaq +302.86 at 18847.28, S&P +92.93 at 5954.50
[BRIEFING.COM] The stock market closed with gains across the board thanks to a late afternoon push following an otherwise tumultuous session. The S&P 500 registered a 1.6% gain and the Nasdaq Composite jumped 1.6%.
Just about everything came along for the afternoon rise, which was led by big gains in mega cap stocks following a soft showing this week in the space. NVIDIA (NVDA 124.92, +4.77, +4.0%), Apple (AAPL 241.84, +4.54, +1.9%), and Microsoft (MSFT 396.99, +4.46, +1.1%), which comprise nearly 20% of the S&P 500 in terms of market capitalization, were standouts from the space.
The equal-weighted S&P 500 closed 1.1% higher and all 11 S&P 500 sectors closed in the green. The consumer discretionary (+1.8%) and technology (+1.7%) sectors, which house mega cap components, were top performers along with the financial sector (+2.1%).
Treasuries also settled with gains, reflecting ongoing concerns about growth. The 10-yr yield dropped five basis points to 4.23%, which was 19 basis points lower this week. The 2-yr yield dropped eight basis points today to 4.00%, which was 19 basis points lower for the week.
This followed the Personal Income and Spending report for January, which showed welcome disinflation on a year-over-year basis in the core-PCE Price Index (the Fed's preferred inflation measure), yet there was a noticeable 0.5% month-over-month decline in real personal spending, which is going to be a big drag on Q1 GDP forecasts.
As a result, the Atlanta Fed GDPNow forecast for Q1 GDP was revised to a 1.5% contraction from 2.3% growth in the last estimate.
There was also new developments on the geopolitical front that market participants were responding to. Stocks took a sharp turn lower around mid-day after President Trump and Ukraine's President Zelenskyy had a heated meeting in the White House, leading Mr. Trump to tell Mr. Zelenskyy he is "gambling with World War III."
- Dow Jones Industrial Average: +3.1% YTD
- S&P 500: +1.2% YTD
- S&P Midcap 400: -0.8% YTD
- Nasdaq Composite: -2.4%
- Russell 2000: -3.0% YTD
Reviewing today's economic data:
- January Adv. Intl. Trade in Goods -$153.3 bln; Prior was revised to -$122.0 bln from -$122.1 bln
- January Adv. Retail Inventories -0.1%; Prior was revised to -0.5% from -0.3%
- January Adv. Wholesale Inventories 0.7%; Prior was revised to -0.4% from -0.5%
- The key takeaway from the report is the widening goods deficit. That was likely a byproduct of the tariff push as importers worked to get ahead of the tariffs, yet it will likely stoke President Trump's push to get going with the tariff implementation.
- January Personal Income 0.9% (Briefing.com consensus 0.3%); Prior 0.4%, January Personal Spending -0.2% (Briefing.com consensus 0.2%); Prior was revised to 0.8% from 0.7%, January PCE Prices 0.3% (Briefing.com consensus 0.3%); Prior 0.3%, January PCE Prices - Core 0.3% (Briefing.com consensus of 0.3%; Prior 0.2%
- The key takeaway from the report isn't singular. There are two: there was welcome disinflation on a year-over-year basis, yet there was a noticeable 0.5% month-over-month decline in real personal spending, which is going to be a big drag on Q1 GDP forecasts. Net-net, not a great report for the growth outlook considering, too, that the personal savings rate jumped to 4.6% from 3.5%.
- February Chicago PMI 45.5 (Briefing.com consensus 41.2); Prior 39.5
Looking ahead to Monday, market participants receive the following data: February ISM Manufacturing Index (prior 50.9%) and January Construction Spending (prior 0.5%) at 10:00 ET.
Treasuries settle with solid gains
28-Feb-25 15:35 ET
Dow +316.25 at 43555.75, Nasdaq +125.95 at 18670.37, S&P +45.61 at 5907.18
[BRIEFING.COM] The major indices are near session highs heading into the close.
The 10-yr yield dropped five basis points to 4.23%, which was 19 basis points lower this week. The 2-yr yield dropped eight basis points today to 4.00%, which was 19 basis points lower for the week.
Looking ahead to Monday, market participants receive the following data: February ISM Manufacturing Index (prior 50.9%) and January Construction Spending (prior 0.5%) at 10:00 ET.
Stocks move higher as mega caps improve
28-Feb-25 15:00 ET
Dow +200.81 at 43440.31, Nasdaq +85.54 at 18629.96, S&P +30.48 at 5892.05
[BRIEFING.COM] The equity market moved higher at the index level in recent trading. The Dow Jones Industrial Average (+0.5%) added more than 100 points over the last half hour.
Recent improvement coincided with buying increasing in the mega cap space. Tesla (TSLA 289.40, +7.28, +2.6%) is an influential winner, trying to find some stability following near 20% plunge over the past two weeks. The selling revolved around concerns about a possible elimination of its tax credit, tariffs, slowing demand, and Elon Musk's rising time commitments within Trump administration.
The Vanguard Mega Cap Growth ETF (MGK) shows a 0.6% gain.
S&P 500 rebounds slightly as AES surges, healthcare stocks struggle
28-Feb-25 14:30 ET
Dow +73.86 at 43313.36, Nasdaq -5.41 at 18539.01, S&P +7.48 at 5869.05
[BRIEFING.COM] The S&P 500 (+0.13%) is in second place on Friday afternoon, billowing up from losses in the previous half hour.
Briefly, S&P 500 constituents Universal Health (UHS 172.49, -13.57, -7.29%), HCA (HCA 301.75, -19.19, -5.98%), and Walgreens Boots Alliance (WBA 10.63, -0.60, -5.34%) pepper the bottom of the standings. UHS and HCA dip despite a dearth of corporate news, while WBA caught a downgrade to Sell out of Deutsche Bank this morning citing doubts over take-private deal.
Meanwhile, AES (AES 11.54, +1.16, +11.18%) is today's top performer after this morning's Q4 beat and upbeat guidance.
Markets waver as Nasdaq dips, gold drops amid Oval Office tensions
28-Feb-25 14:00 ET
Dow -5.57 at 43233.93, Nasdaq -35.78 at 18508.64, S&P -1.21 at 5860.36
[BRIEFING.COM] With about two hours left to go on Friday the tech-heavy Nasdaq Composite (-0.19%) is at the bottom of the standings after a volatile previous hour or so. Markets were rattled after what amounted to a shouting match in the Oval Office between President Donald Trump, VP JD Vance, and Ukrainian President Volodymyr Zelenskyy.
Gold futures settled $47.40 lower (-1.6%) to $2,848.50/oz, pressured by likely profit-taking among precious metals investors while the dollar shows modest strength; this week, the yellow metal lost -3.5%.
Currently, the U.S. Dollar Index is up about +0.3% to $107.64.
NetApp stumbled trying to close deals in Q3; slumps to 10-month lows today (NTAP)
NetApp (NTAP -17%) slumps to 10-month lows today after missing revenue expectations in Q3 (Jan) and lowering its FY25 (Apr) revenue outlook. The stock had been consolidating throughout 2025 following an over +30% rally in 2024. As a storage and data services provider for enterprises, NTAP has benefited nicely from the surging AI-related demand as the technology demands considerable storage needs.
However, during Q3, NTAP had a few stumbles. CEO George Kurian mentioned that its top-line growth of just 2.2% yr/yr to $1.64 bln was disappointing, adding that it resulted from inconsistent execution revolving around a few deals that slipped out of the quarter. Since then, NTAP has instituted a higher level of deal scrutiny on deal progression through the pipeline, deploying tighter controls on closing plans. The company anticipates these actions will enhance its execution, noting that a number of the slipped deals from the quarter have already closed.
Nevertheless, the damage was done, prompting a sharp pullback today and dwarfing the encouraging trends witnessed during Q3.
- While impacted by poor sales executive, NTAP's C-series capacity flash arrays, Storage GRID systems, and all-flash block systems still each delivered growth in Q3, supporting a 10% jump in all-flash array sales and 1% bump in Hybrid Cloud segment revenue (comprises ~90% of total revs). A notable standout from the quarter was Keystone, NTAP's storage-as-a-service offering, which touted almost 60% growth yr/yr.
- AI continues to underpin healthy demand as customers search for a unified and structured view of their data, the centerpiece of NTAP's business. During Q3, the company's AI business exceeded internal expectations, boasting over 100 infrastructure and data lake (a centralized storage system) wins, which spanned geographies and sizes. NTAP's customers include well-known AI players, from Microsoft (MSFT) to NVIDIA (NVDA).
- In the quarter, NTAP continued to strengthen its ties with Big Tech, announcing innovations to various services used by Amazon (AMZN), Google (GOOG), and MSFT.
- Unfortunately for NTAP, guidance displaced these positives. The company anticipates FY25 revs of $6.49-6.64 bln, down from $6.54-6.74 bln and translating to Q4 revs of $1.65-1.80 bln, the midpoint falling short of consensus. NTAP also lowered its adjusted EPS outlook for the year, targeting $7.17-7.27, down from $7.20-7.40. Management mentioned that FX headwinds clipped $0.08 off its earnings forecast and $30 mln from its prior revenue forecast.
In an environment where AI demand continues to run hot, NTAP's deflating guidance is sending investors packing today. Even though management attempted to alleviate concerns, noting that it has already initiated the proper changes to avoid lackluster sales execution in the future, market participants are not taking any chances today, selling now and asking questions later.
Elastic launches higher as emergence of Gen-AI applications fuels beat-and-raise Q3 report (ESTC)
The emergence of GenAI applications, combined with the ongoing efforts from customers to consolidate their observability tools onto Elastic's (ESTC) platform, led to another impressive beat-and-raise earnings report from the company. Following a rebound performance last quarter, ESTC reported 3Q25 results that easily exceeded EPS and revenue expectations, as the number of customers spending $100,000 or more on its platform grew to 1,460 from 1,270 in the year-earlier period
ESTC, which provides a search and observability platform that helps businesses organize, analyze, and visualize large amounts of data, has also recovered from sales segmentation changes in Q1 that impacted revenue.
- More specifically, the company began focusing more on selling into its largest accounts and reduced the number of accounts per sales rep, while also creating distinct greenfield territories to focus on winning new customers. These changes led to a drop in some customer commitments in Q1, but ESTC stated last night that its now back to the level of sales execution it has experienced in the past. In fact, the company is now starting to see a positive impact from these segmentation changes.
- ESTC's beat-and-raise Q2 report on November 21 put the company on the map as an up-and-coming AI play. Last night's strong Q3 earnings report further solidified that notion as ESTC disclosed that more than 1,750 Elastic Cloud customers are using the platform for GenAI use cases with over 270 of those customers spending $100,000 or more. Customers are shifting from textual search to a deeper semantic search -- or search that focuses on understanding the meaning and intent behind a user's search query -- in order to build GenAI applications. Accordingly, ESTC expects GenAI-related tailwinds to continue.
- At the same time, customer consolidation onto ESTC's platform is continuing, culminating in the company securing multiple large deals in Q3. This is reflected by the company's strong net expansion rate of 112% and the aforementioned growth in accounts with over $100,000 in annual contract value.
- Separately, ESTC also announced the appointment of Navam Welihinda as its new CFO, effective today, who joins the company from Grammarly, where he also served as CFO. The company filled this role quickly, announcing in the Q2 earnings press release that CFO and COO Janesh Moorjani was stepping down to pursue another opportunity.
The main takeaway is that ESTC's beat-and-raise Q3 earnings report put the company under the spotlight once again as an emerging AI play. As an increasing number of businesses launch chatbots, demand for ESTC's search tools should only rise as the need to extract information from unstructured data grows.
Dell ends FY25 on a down note; AI server demand remains strong but awaits PC refresh (DELL)
Dell (DELL -6%) is heading lower today after reporting Q4 (Jan) results last night. Dell reported robust EPS upside, but revenue rose just 7.2% yr/yr to $23.93 bln, which was light of expectations. Also, Dell offered downside EPS and revenue guidance for Q1 (Apr). The silver lining was that FY26 guidance was a bit better with upside EPS an in-line revs.
- Growth continues to be driven by its Infrastructure Solutions Group (ISG) segment, where revenue jumped 22% yr/yr to $11.35 bln with 18.1% segment operating margin vs 15.3% last year. Server and networking revenue jumped 37% yr/yr to a Q4 record $6.63 bln. Dell continues to see strong demand across both AI and traditional servers. Dell is seeing continued progress in AI from enterprise customers. Storage revenue was up 5% to $4.72 bln, its second consecutive quarter of growth, fueled by record demand for PowerStore.
- Turning to Client Solutions Group (CSG), segment revenue grew 1% yr/yr to $11.88 bln with 5.3% op margin vs 6.7% last year and vs 5.7% in Q3 due to a more competitive pricing environment. Dell saw some promising signs in Nov-Dec with pockets of strengths in large deals, but there was a slowdown in January. Dell did see strength in SMB (small and medium business), which is historically a leading indicator.
- Commercial revenue was up 5% to $10 bln as demand continued to push into the next fiscal year. Consistent with what it saw coming out of Q3, customers are waiting to refresh in order to buy AI PCs that future-proof their purchases going forward.
- Consumer revenue was down 12% to $1.9 bln as demand remains soft and profitability remains challenged due to elevated levels of discounting. Dell expects a broader PC refresh this year as the installed base continues to age and as the industry gets closer to the Windows 10 end-of-life and as AI PCs become more broadly available. Dell says it's ready and well-positioned for a PC refresh. The good news is that Consumer is a pretty small share of total revenue.
- In terms of the guidance, Dell expects IT spending to grow in FY26. It expects ISG to grow high teens, driven by $15 bln of AI server shipments and continued growth in traditional server and storage. Dell expects CSG to grow low-to-mid single digits, more weighted towards 2H. Given a higher mix of AI-optimized servers and the current competitive environment, Dell expects gross margin to decline roughly 100 bps. For Q1, Dell expects ISG growth in the low teens and CSG to be flat.
Overall, this was a disappointing end to FY25 for Dell. The robust EPS upside was good to see but much of that margin upside stemmed from its Dell IP storage portfolio. Its ISG segment continues to perform well, driven by robust demand for AI servers. However, its CSG segment continues to be a drag on overall results. It sounds like commercial customers are holding off for now on a long-awaited PC refresh and the consumer side remains very weak. The modest silver lining is that 2H sounds like it will be better than 1H.
Autodesk ticks lower despite upbeat Q4 results; possible disruption ahead injects unease (ADSK)
AutoDesk (ADSK -4%) gets knocked down today despite registering a wide earnings beat on in-line revenue growth in Q4 (Jan). The 3D computer-aided design (CAD) software developer used extensively across the construction industry also projected Q1 (Apr) and FY26 numbers mostly above consensus. Also, as reported before Q4 results yesterday after the close, ADSK announced a workforce reduction, aiming to trim its headcount by 9%. CEO Andrew Anagnost mentioned that the company will be reallocating the savings toward its strategic priorities, including the cloud, its platform, and AI.
These investments underscore ADSK's updated long-term game plan. CFO Janesh Moorjani commented that the right actions are in place to pull the company above its steady growth rate near the bottom end of its previously reported +10-15% clip. Even though ADSK's FY26 revenue guidance of $6.895-6.965 bln was largely ahead of analyst expectations, it still translated to another year of growth within the +10-15% range. Mr. Moorjani believes that with its step-up in strategic investments alongside its go-to-market optimization, this pace of growth is no longer appropriate, eyeing a more robust pace of growth alongside higher margins over the longer term, although no specifics were provided.
- In the interim, ADSK is putting the right framework into place. Over the past year, ADSK has shifted from a licensing, multi-year billings model to an annual, subscription-based model. While this initially disrupted upfront payments, it has ultimately resulted in improved revenue growth. In Q4, billings increased 23% yry/r to $2.11 bln, nicely ahead of the company's guidance.
- Management noted that the broader economic environment and underlying momentum of its business during Q4 mirrored the past several quarters, supporting strong renewal rates but generating headwinds to new business growth. During economic uncertainty, organizations can be hesitant to sign new contracts; this is out of ADSK's control. However, within its control is its ability to enhance the productivity of its sales teams, allowing them to focus more on new business growth going forward.
- Despite economic volatility, ADSK still projected decent figures, expecting Q1 adjusted EPS of $2.14-2.17, a potential lift from its $2.14 posted in Q4 and revs of $1.60-1.61 bln, a minor step lower from its $1.64 bln in Q4. For the year, ADSK expects adjusted EPS of $9.34-9.67 and revs of $6.895-6.965 bln. ADSK also expects billings of $7.06-7.21 bln, a 19% jump yr/yr at the midpoint. The company cautioned that due to its headcount reduction and potential tariff impacts, there could be some disruption. However, it incorporated this into its guidance.
Even though ADSK's Q4 performance was solid, its shares are still under moderate selling pressure today. Comments surrounding potential disruption injected some unease into the stock. While ADSK noted that it built this into its forecasts, there are too many variables producing discomfort today, from economic uncertainty surrounding tariffs to the company's decision to trim its workforce and reallocate the funds into strategic investments, including AI. As such, investors are likely waiting for further clarity, which could keep a lid on shares over the near term.
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.
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