Stock market today: Nasdaq, S&P pop to records as Wall Street waits for Nvidia earnings

US stocks closed in a sea of green on Tuesday with record highs for both the tech-heavy Nasdaq Composite (^IXIC) and benchmark S&P 500 (^GSPC). The positive moves come as investors await heavily anticipated earnings results from Nvidia (NVDA), set for release after the bell on Wednesday.

The Nasdaq recovered from earlier session lows to rise about 0.2%, capping off Tuesday's trading day with another consecutive record close. The S&P 500 (^GSPC), which also reached a record, rose about 0.3% while the Dow Jones Industrial Average (^DJI) climbed roughly 0.2%.

Nvidia's upcoming report is expected to spur a big move in its share price and jumpstart stocks more broadly. In the meantime, a wave of quarterly reports from retailers offered some insights into the state of the consumer and the health of the economy.

Lowe's (LOW) sales dropped less than expected as cash-strapped Americans continued to spend on small repairs, while Macy's (M) shares gained after the department store chain's earnings beat a low bar.

Investors have also listened closely to speeches from Federal Reserve officials as a dearth of economic releases starves the rate-cut debate of fuel. Fed governor Chris Waller said Tuesday he needs to see several more months of favorable inflation data before lowering rates, echoing the higher-for-longer policy stance of other central bank leaders in recent weeks.

Read more: How does the labor market affect inflation?

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Nasdaq, S&P 500 hit records

Tue, May 21, 2024 at 4:05 p.m. EDT, Alexandra Canal

US stocks closed in a sea of green on Tuesday as Wall Street sets its focus on Nvidia (NVDA) earnings.

The tech-heavy Nasdaq Composite (^IXIC) and benchmark S&P 500 (^GSPC) each rose to record highs with the Nasdaq closing about 0.2% higher while the S&P 500 rose about 0.3%. The Dow Jones Industrial Average (^DJI) climbed roughly 0.2%.

Nvidia's upcoming report, set for release after the bell on Wednesday, is expected to spur a big move in its share price and jumpstart stocks more broadly.

Nvidia's implied earnings moves have been all over the map

Tue, May 21, 2024 at 3:15 p.m. EDT, Josh Schafer

Nvidia (NVDA) earnings are expected after the close on Wednesday. Given the chip giant's role in the AI rally over the past year, and its large weighting in the S&P 500, the release is expected to have wide implications for the broader market.

This had led many to speculate on where the stock could land come the end of trading on Thursday. As of last Friday's close, options were pricing in about an 8.5% move in shares in either direction. Reuters noted that this would translate to a "market cap swing of $200 billion — larger than the market capitalization for about 90% of S&P 500 companies."

A notable move by any account, for sure. But perhaps more interesting when considering options-implied earnings reactions for Nvidia is just how wrong they've been as of late.

As our chart of the day from the equity research team at Bank of America shows, the options-implied moves for Nvidia on the Friday before earnings have been a poor indicator of whether the stock will move more or less than expected.

In the second and third quarters, options pricing projected a large move and it didn't come. Leading into the most recent report, pricing fell short of the actual move.

And so, like most highly anticipated releases, no matter how much we talk up the event before it happens, it's simply hard to know how the market will react until it does.

Tesla stock pops on new details for electric semi-truck plan

Tue, May 21, 2024 at 2:25 p.m. EDT, Alexandra Canal

Tesla (TSLA) stock popped more than 5% on Tuesday after the company unveiled new details on its plan to develop electric semi trucks. As Yahoo Finance's Pras Subramanian reports:

The company confirmed its Tesla Semi remains on track for production-spec deliveries to customers by 2026 while offering more details on range and payload capacity for the EV truck.

Speaking at the Advanced Clean Transportation (ACT) Expo in Las Vegas, Tesla exec Dan Priestley said, "We're building a factory in Nevada that is being ramped in 2026 for customer deliveries, and ramping to eventual target capacity to 50,000 units a year."

Currently, the Tesla Semi is in pilot testing with PepsiCo’s FritoLay division. Priestley said PepsiCo would be receiving an additional 50 trucks in its fleet for the pilot program. The company is currently testing approximately 35 trucks.

In his presentation, Priestley said the company's long-range Semi would have a range of up to 500 miles with a 23,000-lb vehicle weight.

Its standard-range truck would be capable of 300-mile trips with an unladen 20,000-lb vehicle weight.

In real-world testing with PepsiCo, Tesla Semis performed long-range runs of 250 and 520 miles with a gross vehicle weight including cargo of up to 82,000 lbs, the maximum allowed by law.

DJT falls 10% after posting big Q1 operating loss

Tue, May 21, 2024 at 1:40 p.m. EDT, Alexandra Canal

Trump Media & Technology Group (DJT), the parent company of Donald Trump's social media platform Truth Social, fell about 10% on Tuesday after it reported a first quarter operating loss of $327.6 million compared to a loss of about $210,000 in the year-ago period.

DJT, a top trending ticker on Yahoo Finance, reported revenue of $770,500 in the first quarter.

It also posted an adjusted EBTIDA loss of more than $12 million compared to a loss of roughly $3.6 million in the prior year. Half of that loss, according to DJT, was due to one-time payments related to the closing of the company's SPAC merger with Digital World Acquisition Corp. in March.

“After an unprecedented, years-long process, we have consummated our merger and dispensed with the vast bulk of merger-related expenses, leaving the company well-capitalized and supported by a legion of retail shareholders who believe in our mission to provide a free-speech beachhead against Big Tech censorship," Trump Media CEO Devin Nunes said in the earnings release.

Trump maintains a roughly 60% stake in Truth Social. At current levels of around $44 a share, Trump Media boasts a market cap of roughly $6 billion, giving the former president a stake worth around $3.6 billion. Right after the company's public debut, Trump's stake was worth just over $4.5 billion.

Last month, the stock hit a milestone that secured Trump an additional $1.2 billion.

Crypto stocks surge on reports of ether ETF approval

Tue, May 21, 2024 at 12:50 p.m. EDT, Alexandra Canal

Cryptocurrencies jumped on Tuesday as rumors swirled the US Securities and Exchange Commission (SEC) could approve ether ETFs as soon as this week.

Ethereum (ETH-USD) surged more than 20% while bitcoin (BTC-USD) climbed about 4% to trade above $70,120 a coin. Crypto-adjacent stocks like Coinbase (COIN) and Robinhood (HOOD) also moved higher amid the speculation.

Similar to the spot bitcoin ETFs, which were approved by the SEC earlier this year, an ether ETF approval would offer the ethereum coin to a wide swath of investors.

According to Bloomberg, the SEC contacted at least one exchange and at least one potential spot ether ETF issuer to update their respective filings. That fueled optimism an SEC approval could be near.

Another Fed official thinks rates need to stay where they are

Tue, May 21, 2024 at 12:04 p.m. EDT, Alexandra Canal

Fed governor Chris Waller said Tuesday he believes interest rates need to stay put as sticky inflation clouds the timeline of a Fed rate cut.

Yahoo Finance's Jennifer Schonberger reports:

"While the April inflation data represents progress, the amount of progress was small," Waller said in a speech in Washington. "In the absence of a significant weakening in the labor market, I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy."

Waller said the latest April reading from the Consumer Price Index was a "reassuring signal" but also gave it a C+ grade, calling the easing "so modest" it didn’t change his view that more evidence of cooling inflation is needed.

CPI on a "core" basis, which strips out food and energy prices, rose 3.6% year over year, a cooling from the 3.8% increase seen in March. That followed a first quarter where the readings were consistently hotter than expected. The Fed's goal is to get inflation down to 2%.

Fed governor Christopher Waller. (Sarah Silbiger/Getty Images) (Sarah Silbiger via Getty Images)

Waller became the latest central bank official to stress a higher-for-longer stance. On Monday, Fed Vice Chair Philip Jefferson and Fed Vice Chair for Supervision Michael Barr both called for holding rates where they are, allowing more time for restrictive policy to work.

Meanwhile, Fed Chair Jerome Powell made it clear last week that he thinks the Fed will need more than a quarter's worth of data to really make a judgment on whether inflation is steadily falling toward 2%. Waller appears to want more, noting he would like to see “several” months of data.

That implies it will take more than three inflation reports for the Fed to feel confident about lowering rates from a 23-year high, putting the odds on a first rate cut in September at the earliest if the data supports such a move.

Comcast reveals price tag for new streaming bundle

Tue, May 21, 2024 at 11:13 a.m. EDT, Alexandra Canal

Comcast (CMCSA) revealed the price of its recently announced StreamSaver bundle, which will package Peacock's ad-supported premium tier with Netflix's basic ad tier (NFLX) and Apple TV+ (AAPL).

The new offering, available to Comcast’s broadband internet and TV subscribers, will launch next week at a price point of $15 a month, yielding savings of around 35%.

"It's a home run for consumers," David Watson, president and CEO of Comcast's cable division, said during a JPMorgan investor conference on Tuesday. "I believe that StreamSaver [presents] a series of opportunities. ... We're thrilled to have Netflix and Apple to be part of this."

Customers can also access Netflix and Apple TV+ subscriptions through Comcast's Now TV streaming platform, which includes Peacock and 40 other channels, for $30 a month (as opposed to $20 a month without the additional services.)

Watson added StreamSaver "opens up possibilities" when it comes to future bundling opportunities.

The developments come as media companies face pressure from investors to scale their streaming services and achieve profitability. At the same time, the companies are dealing with more competition from tech giants like Amazon (AMZN) and YouTube (GOOGL, GOOG), which are gobbling up streaming deals.

Warner Bros. Discovery and Disney announced a new streaming bundle that will combine Disney+, Hulu, and Max, with a launch date set for this summer in the US. In December, WBD partnered with Netflix on a $10 ad-supported bundle offered through Verizon (VZ).

And earlier this year, Warner Bros. announced a sports streaming partnership with Disney's ESPN and Fox (FOXA), set to debut later this fall. Last week, the companies announced its name: Venu.

Read more here.

Lowe's, Macy's report mixed quarterly results

Tue, May 21, 2024 at 10:15 a.m. EDT, Alexandra Canal

Investors digested a slew of retail earnings on Tuesday as shares of Lowe's (LOW) fell in early trading while Macy's (M) stock hugged the flatline.

Lowe's reported quarterly sales that dropped more than expected as Americans pulled back on discretionary home improvement projects.

The company also issued weak guidance for the current quarter, warning it expects operating margins to remain under pressure. It reiterated its full-year targets. Shares dipped around 3%.

Meanwhile, Macy's beat muted first quarter expectations. As Yahoo Finance's Brooke DiPalma reports:

The department store chain reported revenue of $4.85 billion, down 2.7% compared to last year, and slightly higher than Wall Street's estimates of $4.81 billion. Its adjusted earnings per share of $0.27 also topped the $0.14 expected.

Same-store sales fell 1.2%, less than the 2.78% decline Wall Street predicted as its new strategy takes effect.

"We do believe that we're getting traction, it's still early days," Macy's CFO Adrian Mitchell told Yahoo Finance over the phone. "We're still practicing the changes in the stores from a staffing and selling and service standpoint, there are a number of changes that are still not implemented in the store. There's more to come as we get into the summer season then the back half of this year."

Nasdaq falls at open

Tue, May 21, 2024 at 9:32 a.m. EDT, Alexandra Canal

US stocks opened mixed on Tuesday as investors biding their time for Nvidia (NVDA) results looked to retail earnings and Fedspeak for clues to the economy.

The S&P 500 (^GSPC) slipped about 0.1% while the Dow Jones Industrial Average (^DJI) hovered near the flat line. Meanwhile, the Nasdaq Composite (^IXIC) slipped about 0.4% after finishing Monday at a record high.

The read-through on Macy's quarter

Tue, May 21, 2024 at 7:41 a.m. EDT, Brian Sozzi

Macy's (M) shares are getting a pop after its earnings report this morning, as the company didn't warn for the full year and said sales at its 50 best stores rose.

In fact, the EPS guidance range was generally left alone.

And that surprises me, given the first quarter challenges in the credit card business (sales fell) and merchandise margins (also fell).

While investors are choosing to embrace the positive on Macy's, I caution not to overlook the negatives. One of them being that sales are declining at hundreds of other Macy's stores that will likely be closed over the next few years. You have to evaluate the entire company, not just 50 stores, as the company's earnings release language would like for one to do.

Further, the company's commentary on the consumer wasn't exactly confidence-inspiring as to how the back-to-school shopping period will shake out.

Yahoo Finance's Brooke DiPalma has the earnings breakdown here.

Good valuation point on Nvidia from Evercore ISI

Tue, May 21, 2024 at 5:13 a.m. EDT, Brian Sozzi

An interesting phenomenon on Nvidia (NVDA) has appeared.

The stock of the AI chip king may actually be cheap, suggests Evercore ISI in a note this morning.

"The combination of decelerating revenue growth and increased concerns about competition has driven Nvidia's relative P/E ratio to the lower-end of the 10-yr range, creating a scenario where a healthy beat-and-raise [on earnings Wednesday] will lead to near-term upside to the stock … and we expect a healthy beat-and-raise," says analyst Mark Lipacis.

His chart below puts a finer point on it.

I will note that Nvidia's stock isn't actually super cheap from a pure valuation perspective. It trades on close to 40 times estimated forward earnings P/E ratio ... the S&P 500 trades at about 20.7 times.

All the key valuation metrics on Nvidia from Yahoo Finance can be found here.

Nvidia's stock takes a valuation expansion breather. (EvercoreISI)

Nvidia's dominance in one chart

Tue, May 21, 2024 at 5:05 a.m. EDT, Brian Sozzi

Nvidia (NVDA) is having a week, and it hasn't even reported earnings yet (that's Wednesday evening).

CEO Jensen Huang seemingly wowed at Dell's (DELL) Las Vegas conference yesterday, with Dell himself hinting a potential move into CPUs by Nvidia.

As you continue your homework on Nvidia ahead of tomorrow's report, a new chart from Goldman Sachs offers perspective on the AI chip darling.

Nvidia's dominance, in one chart. (Goldman Sachs)