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Retail & NVIDIA Earnings This Week; COF Buys DFS

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Tuesday, February 20th, 2024

We begin a new holiday-shortened trading week today with pre-market futures slightly down overall. Traders and investors continue to come to grips with what these higher-than-expected CPI and PPI numbers from last week mean, if they in fact mean anything (they could be a temporary seasonal wrinkle to be ironed out over time). The Dow, S&P 500 and Nasdaq are all trading -0.3% or thereabout at this hour. The last week of trading has presented similar challenges, though the S&P remains above 5000 right now.

It’s a slow week for economic data overall, following Jobs Week and last week’s important inflation reads. What we do get is supplemental information from the Fed this week, including tomorrow afternoon’s release of the FOMC minutes from the Fed’s last meeting, as well as public appearances from Fed Governors Bowman, Cook and Waller, Fed Vice Chair Jefferson, and Fed Presidents Bostic (Atlanta) and Kashkari (Minneapolis). The Fed’s next meeting concludes one month from today.

Earnings season is winding down this week, as well — though arguably the most important company on Wall Street releases Q4 results tomorrow after the close: NVIDIA (NVDA - Free Report) . The innovator of graphics chips has already grown +50% year to date, +250% over the past year and +1725% in the past five years. It still carries with it a Zacks Rank #2 (Buy) into its earnings report, at least as of this morning. Whether it’s AI, crypto or streaming, the future continues to look bright for NVIDIA. We’ll see if it can keep the good times rolling.

Ahead of today’s open, Walmart (WMT - Free Report) is up +2.7% on its Q4 earnings results reported this morning, with earnings of $1.80 per share representing a +9% beat (and swinging to a growth number year over year) on $173.4 billion in revenues, topping estimates by +1.6%. Global e-commerce outperformed expectations, and the company upped its dividend yield by +9%. Also, as announced last week, Walmart is buying flat-screen TV maker Vizio for $2.3 billion in cash. For more on WMT’s earnings, click here.

Home Depot (HD - Free Report) , on the other hand, is trading down -2% on its Q4 numbers ahead of today’s opening bell.  The company beat earnings estimates by 5 cents to $2.82 per share on $34.79 billion in quarterly sales, +0.68% from expectations, and down slightly from the $35.83 billion reported in the year-ago quarter. Full-year sales guidance has come out lower than anticipated, perhaps leading to the mild selloff this morning. For more of HD’s earnings, click here.

Finally, the biggest corporate merger of 2024 thus far was announced this morning: Capital One (COF - Free Report) has reportedly agreed to buy Discover (DFS - Free Report) in an all-stock deal worth $35.3 billion. The new company will constitute the largest credit card company by loan volume in the world, to be divvied up 60% to Capital One and 40% to Discover. DFS shares are up +14% at this hour on the news. Both companies had been Zacks Rank #3 (Hold)-rated stocks ahead of this merger.

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