Stock market today: Tech stocks lead market slide with Nvidia earnings on deck

US stocks closed in the red on Tuesday as investors looked to big retailer earnings to provide insight into consumer resilience amid doubts about the odds of a "soft landing."

The tech-heavy Nasdaq Composite (^IXIC) led the declines, dropping nearly 1%. The S&P 500 (^GSPC) fell about 0.6%, while the Dow Jones Industrial Average (^DJI) dropped roughly 0.2% after the three gauges closed a turbulent week lower.

Earnings are front of mind as markets reopen after the Presidents' Day break, with quarterly reports from leading US retailers Walmart (WMT) and Home Depot (HD) providing a mixed picture. Shares of Home Depot dipped after it signaled demand has failed to pick up amid "sticky" inflation, while Walmart jumped as its upbeat sales outlook and dividend increase boosted the mood.

Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards

Looming large are Wednesday's earnings from Nvidia (NVDA), seen as a potential turning point for markets. With just a handful of megacap stocks driving the lion's shares of gains, any shortfall amid high hopes for the AI-focused chipmaker — the third-biggest company by market value — risks a pullback for stocks more broadly.

LIVE COVERAGE IS OVER12 updates

Stocks close lower as investors eye Nvidia earnings

Tue, February 20, 2024 at 4:02 p.m. EST, Alexandra Canal

US stocks closed lower across the board on Tuesday.

The tech-heavy Nasdaq Composite (^IXIC) led the declines, dropping nearly 1%. The S&P 500 (^GSPC) fell about 0.6%, while the Dow Jones Industrial Average (^DJI) dropped roughly 0.2%.

Earnings from Nvidia, due Wednesday, could be a potential turning point for markets as investors eye big results from Wall Street's AI darling.

Home Depot doesn't see a 'hockey stick recovery' for housing market: CEO

Tue, February 20, 2024 at 2:45 p.m. EST, Dani Romero

A soft housing market has weighed on the home improvement sector over the past year, and signs of a turnaround could remain elusive in 2024, according to the country's biggest home improvement retailer.

"I'd say we have a neutral look on housing for 2024," Home Depot (HD) CEO Edward Decker said on the company's fourth quarter earnings call this morning. "We don't think there's incremental pressure nor do we think that we're quite ready for a hockey stick recovery."

Home Depot stock was up about 0.2% in afternoon trade on Tuesday.

The retailer said Tuesday that its fourth quarter sales declined 3% to $34.8 billion from the year-earlier period. It expects sales growth of 1% in its fiscal year 2024.

“We have a housing market in the US that is largely in a state of paralysis. There’s just not much happening right now. Lower rates will help unlock that paralysis and serve as a better driver in better sales for Home Depot," Oppenheimer managing director Brian Nagel told Yahoo Finance Live Tuesday morning.

Existing home sales slumped last year given rising interest rates, limited housing inventory, and lower affordability, which in turn led to some softness around home improvement spending as turnover in the housing market slowed.

And with the odds of an imminent rate cut from the Federal Reserve falling, Decker expects to see an extension of this moderation in home spending through the first half of this year.

"[Home Depot CFO Richard McPhail] has been talking for some time [about] the Fed's stance of higher for longer," Decker added. "I think we now we have an appreciation that longer is going to go through the first half of this year."

These comments echo what others in the housing industry have said of late.

"But the inflation numbers, if they continue to stay persistently higher, then, that calls into question whether or not the Fed is going to cut three times, maybe they only cut two, and then when do they cut?" NAHB CEO Jim Tobin told Yahoo Finance Live last week.

"This idea that they're going to cut in the spring seems to be off the table now."

Before Those Nvidia Earnings....

Tue, February 20, 2024 at 2:44 p.m. EST, Brian Sozzi

It's almost Nvidia (NVDA) earnings day!

I hope you have preordered your food delivery for tomorrow night so you can place full attention on CEO Jensen Huang's earnings call. For to miss Huang's comments could mean not good things for your broader portfolio of tech stocks if he says something bad (and the opposite if he really delivers an effortless earnings call).

But before that call, below are some impactful new stats from the strategy team over Goldman Sachs.

I think they go a long way to explaining why Nvidia and the Magnificent Seven have become such an important driver of stock prices.

• "If Nvidia reports estimates in line with consensus [for the quarter], the Magnificent 7 will have grown sales by 15% year/year and lifted margins by 582 basis points year/year, leading to earnings growth of 58%. In contrast, the remaining 493 stocks in the S&P 500 grew sales by 3% year/year while margins contracted by 56 basis points and earnings fell by 2%."

• "The strength of the Magnificent 7’s results has caused analysts to lift their expectations for 2024. During the past 3 months, Magnificent 7 earnings estimates have been revised upwards by 7% and margins have been revised upwards by 86 basis points. This compares with a 3% downward revision to earnings and 30 basis point downward revision to margins for the remaining 493 stocks. The Magnificent 7 accounted for 11% of total 2023 S&P 500 sales and 18% of earnings, and consensus expects the stocks to grow EPS by 20% in 2024."

Wall Street strategists see even more upside for the S&P 500 in 2024

Tue, February 20, 2024 at 1:53 p.m. EST, Josh Schafer

The high-water mark for Wall Street's S&P 500 (^GSPC) predictions has moved up yet again.

The S&P 500 has hit new record highs to kick off 2024.

The surge in stocks put the benchmark average above the average Wall Street strategist year-end target less than two months into the year. And now, several of those strategists are boosting their projections for how far stocks can run in 2024.

On Friday, Goldman Sachs boosted its year-end target from 5,100 to 5,200. Three days later, UBS also boosted its target. The UBS Investment Bank equity strategy team led by Jonathan Golub now sees the S&P 500 ending this year at 5,400, up from a prior call for 5,100. This reflects nearly an 8% increase from Monday's opening price.

"Despite our bullish outlook, it appears we were not bullish enough," Golub wrote.

Both Goldman Sachs and UBS expressed a more upbeat outlook for corporate earnings this year than previously forecasted when describing why they see further upside in stocks. To Goldman, an increased earnings and profit outlook for the "Magnificent Seven" tech stocks is likely to drive a lion's share of the gains.

Meanwhile, UBS points out that recent readings on stickier-than-expected inflation might not be as troublesome for stocks as initially feared.

"Earnings benefit from higher inflation," Golub wrote in a note to clients on Tuesday.

He added: "Returns and profits are measured in nominal dollars. ... Put differently, higher inflation tends to be a positive for stock prices. While the market sold off on more robust [Consumer Price Index] and [Producer Price Index] reports last week, our work indicates that these demand-driven readings are constructive for future returns."

A graph from UBS Investment Bank shows that "earnings benefit from higher inflation." (UBS Investment Bank)

Nvidia, Walmart, Super Micro: Stocks trending in afternoon trading

Tue, February 20, 2024 at 1:21 p.m. EST, Alexandra Canal

Here are the stocks trending in mid-afternoon trading on Tuesday:

Nvidia (NVDA): The chipmaker's stock fell about 6% on Tuesday — on track for its largest percent decrease since May 2023 as the company shed about $100 billion off of its market cap. The moves come just ahead of its quarterly results on Wednesday.

Nvidia, which has greatly benefitted from the AI boom, is expected to report Q4 revenue of $20.4 billion, up 236% year over year, with earnings per share estimated to clock in at $4.60, an increase of 422% compared to the year-ago period.

Super Micro Computer (SMCI): The company's stock fell another 10% on Tuesday following a Friday reversal after shares tripled in value in less than a month. SMCI has seen shares surge amid AI optimism with investors beginning to weigh frothiness in the market.

Advanced Micro Devices (AMD), another AI darling, also saw shares fall on Tuesday, declining about 6%.

But analysts say there's more room to run. On Tuesday, Rosenblatt Securities increased its price target on SMCI shares to $1,300 from $700. The stock has soared nearly 700% since last year.

Walmart (WMT): Shares climbed about 3% after the retailer reported another strong quarter of sales growth while also confirming plans to buy budget TV maker Vizio. Same-store sales climbed 4% in the quarter, driven by more shoppers going to the store more frequently.

Discover Financial Services (DFS): Shares surged about 15% after Warren Buffett-backed Capital One confirmed plans to acquire Discover in a $35.3 billion deal. The agreement, which is expected to receive intense antitrust scrutiny, would form the sixth-largest US bank by assets.

Nasdaq leads stock market declines

Tue, February 20, 2024 at 12:27 p.m. EST, Alexandra Canal

US stocks took another leg down by mid-afternoon trading on Tuesday.

The tech-heavy Nasdaq Composite (^IXIC) led the day's declines, dropping more than 1.5%. The S&P 500 (^GSPC) sank about 0.9%, while the Dow Jones Industrial Average (^DJI) fell around 0.5%.

Nvidia stock falls 6% ahead of earnings

Tue, February 20, 2024 at 11:49 a.m. EST, Alexandra Canal

All eyes will be on Nvidia (NVDA) this week with the chipmaker set to report earnings after the bell on Wednesday.

The company's anticipated Q4 revenue is $20.4 billion, up 236% year over year. To put that expectation into perspective, its total 2022 revenue was $27 billion. Earnings per share are expected to clock in at $4.60, an increase of 422% compared to the year-ago period.

Still, the stock dropped about 6% on Tuesday — on track for its largest percent decrease since May 2023 as it shed about $100 billion off of its market cap.

Nvidia has been one company that's greatly benefitted from the AI boom.

Despite Tuesday's losses, the company boasts a current market cap of just under $1.7 trillion. That's the third-highest market cap in the world, behind only Apple (AAPL) and Microsoft (MSFT).

Shares are up nearly 40% since the start of the year and have soared about 220% since last year.

Wednesday's report will not only be important for shares, but will also be critical for markets.

"If Nvidia misses or just fails to hit a home run ... that can have a gravitational effect on the whole market," Interactive Brokers chief strategist Steve Sosnick told Yahoo Finance's Madison Mills.

Walmart CFO: Retailer won't enter media biz — despite Vizio deal

Tue, February 20, 2024 at 11:00 a.m. EST, Alexandra Canal

Walmart (WMT) might have just confirmed plans to acquire TV maker Vizio — but don't expect the retailer to be a content generator.

While speaking in an interview with Yahoo Finance Live on Tuesday, Walmart CFO John David Rainey revealed the company has no plans to enter the crowded media business.

"That's arguably a red sea of competition and I'm not sure that that's really what we need to be focused on," Rainey said.

"I think we can provide better value on focusing some of the basics that our customers expect from us," he continued, adding improving its delivery and e-commerce capabilities remain top priorities.

In other words, Walmart doesn't seem to want to compete in the original content and streaming space, which competitor Amazon (AMZN) has certainly leaned into over the past several years after the tech giant completed its acquisition of MGM in 2022.

"We want to focus on the basics," Rainey reiterated.

Watch the full interview here.

Earnings roundup: Walmart, Home Depot

Tue, February 20, 2024 at 10:15 a.m. EST, Alexandra Canal

Walmart (WMT) and Home Depot (HD) reported quarterly results before the bell on Tuesday.

Here's what to know:

Walmart: The retailer saw shares climb more than 5% in early trading after it reported yet another strong quarter of sales growth while also confirming plans to buy budget TV maker Vizio.

Same-store sales climbed 4% in the quarter, compared to Bloomberg consensus estimates of 3.12%. As Yahoo Finance's Brooke DiPalma reports, the rise was driven by more shoppers going to the store more frequently. However, a slight drop in the average ticket signaled they added less to their basket.

Read the full earnings breakdown here.

Home Depot: Shares dipped about 1.5% after the company's guidance disappointed investors. Home Depot said it expects 1% sales growth in fiscal 2024. Wall Street was expecting closer to 1.6%.

Still, the home improvement giant beat expectations on both the top and bottom lines, despite quarterly sales declining nearly 3% compared to the year-ago period.

Stocks slide to kick off shortened trading week

Tue, February 20, 2024 at 9:35 a.m. EST, Alexandra Canal

US stocks fell on Tuesday to kick off a shortened holiday trading week.

The tech-heavy Nasdaq Composite (^IXIC) led the early morning losses, dropping roughly 0.4%. The S&P 500 (^GSPC) fell about 0.3%, while the Dow Jones Industrial Average (^DJI) slipped around 0.2% after the three gauges closed a turbulent week lower.

All eyes now turn to earnings, with leading US retailers Walmart (WMT) and Home Depot (HD) reporting mixed quarterly results on Tuesday. Chipmaker Nvidia (NVDA) is set to report earnings on Wednesday.

Decoding Walmart’s $2.3 Billion Deal for TV Maker Vizio

Tue, February 20, 2024 at 8:47 a.m. EST, Brian Sozzi

Yours truly and the Yahoo Finance Live team are sitting down with Walmart (WMT) CFO John David Rainey today at 9:30 a.m. ET — so we plan to drill into the company’s play for Vizio (VZIO) revealed this morning, along with earnings.

At first, you would think this deal is all about selling more TVs at Walmart during the Super Bowl or Christmas. Vizio, after all, relies on Walmart for about 50% of its annual sales.

But there is so much more to this deal beneath the surface, which Walmart alluded to in its press release:

• This is a big data play: Walmart will gain impressive access to consumer behavior via Vizio’s Inscape measuring system. More on that process here.

• This is a big advertising play: Amazon (AMZN) has been making bank on ad sales for some time, and so has Walmart under the radar. In the fourth quarter, Walmart delivered double-digit percentage ad sales growth in its US division, Sam’s Club, and International division. This will now be turbocharged for Walmart via access to Vizio’s Smartcast operating system.

Ultimately, this deal is bad news for Roku (ROKU). Shares are down 6% on the news after getting hit on deal speculation a couple of weeks back. Trade Desk (TTD) is also being sent lower by 3% — but I need to do more work on their business before saying there is a bad impact on them.

No real movement in shares of Best Buy (BBY) on the news, though Citi did reiterate a Sell rating on the stock this morning into earnings later this month.

Vizio shares are up 16%.

Before you go, a look back at Yahoo Finance's coverage of Vizio's IPO in 2021 via a chat with their CFO Adam Townsend.

Capital One's $35.3 billion Discover deal is unwelcome news for Visa, Mastercard, and Amex

Tue, February 20, 2024 at 7:57 a.m. EST, Brian Sozzi

I could tell you who is probably having a busy morning: top execs at Visa (V), Mastercard (MA), and American Express (AXP) following Capital One’s (COF) $35.3 billion deal for Discover (DFS).

I suspect they will be fielding calls from investors who will be curious about their thoughts on what this transaction could mean for the future of competition in the payments space (notice I say could, because in this regulatory climate and ahead of an election, a consumer credit card deal will be very closely scrutinized by regulators).

Some initial talking points for what this combined company will look like:

• A total asset base of $630 billion

• Broken down as follows:

  • $254 billion in credit card receivables

  • $90 billion in commercial loans

  • $85 billion in consumer loans

  • $10 billion in student loans

  • $145 billion of other earning assets

• About $2.7 billion in pre-tax synergies

The vibe on the Street this morning is that the deal makes strong sense for Capital One and is the right move even if the price tag is stiff (said price tag is hitting Capital One’s stock to the tune of over 3%).

But it’s the commentary around the implications for Visa, Mastercard, and Amex that has captured most of my attention this morning(note: shares of Visa, Mastercard, and Amex are all lower).

For your review:

"According to The Nilson Report, Capital One issued debit and credit cards generated ~$600 billion in purchase volume in 2022 (3% of V/MA global volume), making it the third largest domestic issuer of V/MA credit cards (~60% of its credit card portfolio being with Mastercard according to Nilson, ~40% Visa) and the twelfth largest debit card issuer (primarily Mastercard, we believe). We expect any transition away from V/MA would likely be slow (Mastercard renewed its network partnership with Capital One in 1Q22, Visa in the fourth quarter of calendar year 2022) and portfolio by-portfolio (V/MA have a ~40% larger global acceptance network). Acknowledging Discover’s network is much smaller generating 2% the volume as V/MA globally, it gives Capital One the optionality to negotiate away from (or price-down) the global networks over time, in our view." -JPMorgan analyst Tien-tsin Huang

"We believe the combination of COF and DFS should be strategically compelling from a competitive perspective vs. V/MA. At a high level, the risk to the networks is simple—can COF monetize DFS’s network capabilities, which historically have not gained much market share vs. the networks? COF’s strong card and banking presence could prove to be the combo platter that starts a more competitive environment vs. V/MA and AMEX. Obviously, V/MA do not underwrite credit and therefore must rely on their card issuing bank relationships for direction and non-anonymized data, but in an environment of AI, whereby large 'specific' data assets are becoming more valuable, the combination of Capital One and Discover becomes more compelling, in our view. All else equal, we believe the combination could prove to be more competitive for V/MA and thus worth watching." -RBC analyst Daniel Perlin