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Salesforce, HP, Snowflake All Down on Reported Earnings

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Wednesday, February 28th, 2024

Markets took a breather from trading days closing in the green today; none of the four major indices spent anytime north of zero for the session, even as it looked like mild economic prints ahead of today’s open were softening things for bulls to make a fresh run. Then again, valuations do remain high. The Dow closed down a marginal -0.06% while the S&P 500 was -1.7%. The tech-heavy Nasdaq and the small cap Russell 2000, which had been leading the markets over the past several days, came in at -0.55% and -0.77%, respectively.

The U.S. Trade Balance this morning depicted a U.S. economy slipping slightly deeper in debt, but with inventories starting to become depleted. Inventory growth, by the way, tends to be the poorest-quality growth, because if you have a lot on hand and can’t sell it, it just sits there. Obviously, U.S. companies let their supplies dwindle and will need to re-stock; not a bad place to be for an economy with inflation continuing to abate.

After today’s closing bell, Salesforce (CRM - Free Report) outperformed expectations on both top and bottom lines — which was to be expected: CRM never misses earnings results. Earnings of $2.29 per share outpaced the Zacks consensus by 3 cents, +35% year over year, while revenues of $9.29 billion outdid the expected $9.21 billion, for +11% year over year growth. Full-year revenue guidance in the current year is for high single-digits, which was enough for late-session traders to sell the stock, which is now down -4% in the after-market.

Hewlett Packard (HPQ - Free Report) is also out with earnings results this afternoon, for its fiscal Q1, which saw a meet at 81 cents per share on the bottom line — the third-straight meet for the tech hardware giant — on $13.2 billion in quarterly sales which missed expectations of $13.6 billion, -4.4% year over year. Like Salesforce, HP is also trading down -4% in the late market on the news today.

Montana-based software firm Snowflake (SNOW - Free Report) more than doubled expectations on its bottom line for Q4 — earnings of 35 cents per share, above the 17 cents analysts were looking for, with quarterly sales which also clobbered projections: $774.7 million versus $759.8 million anticipated. Yet shares have fallen precipitously on the news, nearly -25%, not only on a very high valuation but also on the news that its CEO, Frank Slootman, would retire after five years heading Snowflake.

Tomorrow morning brings us fresh Personal Consumption Expenditures (PCE) data for the latest read on how inflation in the modern economy is progressing. As of the PCE report last month, both headline year over year and core year over year came in below 3%; we expect this will continue, however, as we’ve seen with other economic prints of late, a stronger-than-expected economy is keeping numbers like these somewhat elevated. We’ll see if this is the case here, tomorrow, as well.

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