New York morning: markets assess Nvidia report and look for new drivers

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The focus of investors' attention today will be NVIDIA (NVDA) financial results released the day before after the close of trading. The company's shares are trading in moderate plus on the pre-market on February 26, the market reaction to its strong results looks restrained. The corporation's revenues totaled $68.1 billion, while the consensus was $66.2 billion. The main contributor to the growth of the index was the data center segment: its revenue increased 75% year-over-year to $62.3 billion. Management's forecast for the current quarter assumes a result of $78 billion, while the average market expectation is $72.6 billion. The restrained dynamics of NVIDIA shares after the release is explained by the shift of the investment community's focus on the outlook for 2027-2028. Management noted the potential for revenues from chips in the Blackwell and Rubin lines to exceed $500 billion, which is generally already built into expectations. CEO Jensen Huang reiterated that demand for computing power is increasing exponentially. On the eve of NVIDIA's results release, the options market was pricing the stock to move only about 5.6% in either direction, which, according to ORATS, corresponds to a three-year low.

This Thursday, February 26, the weekly jobless claims data will be released as usual. Consensus for initial applications: 212 thousand, forecast for repeat applications: 1.865 million - after 206 thousand and 1.869 million respectively for the previous similar period. Based on these statistics, the sustainability of employment can be quickly assessed. The February business activity index from the FRB Kansas City (January: 0 points) will show whether the industrial sector is holding near the zero zone or whether a slight upturn is forming. Speech of Michelle Bowman, member of the Board of Governors of the Federal Reserve System, in the Senate may clarify her position on easing the requirements for mandatory reserves of banks and provide additional signals on the future course of monetary policy.

Vistra (VST), D-Wave Quantum (QBTS), Sempra (SRE), Baidu (BIDU), Cheniere Energy (LNG), Eos Energy Enterprises (EOSE ) and Celsius Holdings (CELH) will report before the main session opens. CoreWeave (CRWV), Intuit (INTU), Rocket Lab USA (RKLB), Dell Technologies (DELL), Rocket Companies (RKT), Autodesk (ADSK ) and MP Materials (MP) will post results after the close of trading. Investor focus will shift toward technology and energy issuers related to the themes of AI infrastructure, software, and gas, which may locally amplify intraday volatility.

Futures on S&P 500 are trading moderately negative after recent growth. Reaction to strong NVDA report and new signals on economy and geopolitics may be the drivers of further movement. We assess the balance of risks for the upcoming session as neutral with increased volatility.

- Salesforce (CRM) shares are losing about 3% ahead of the start of the main session, reacting to full-year revenue guidance in the range of $45.8-46.2 billion, the midpoint of which came in slightly below consensus. Investors remain skeptical about the ability of new agent-based AI products to offset slowing growth in the core business.

- Quotes of IonQ (IONQ) added more than 15% in the premarket after the release of its quarterly results. The company's revenue rose 428% to $61.89 million, with a forecast of $40.4 million. Annual guidance for 2026 was $235 million versus the consensus of $191 million, which the market saw as evidence of accelerating commercialization of quantum computing.

- Shares of Nutanix (NTNX) jumped more than 23% after announcing a strategic partnership with AMD (AMD). Under the multi-year agreement, one of the semiconductor industry leaders will invest $150 million ($36.26 per share) in the company and allocate up to $100 million for joint development. The investment community saw this as a confirmation of Nutanix's position in the AI infrastructure segment, although its revenue guidance was below average expectations.

- Shares of Synopsys (SNPS) lost about 3.5% in the premarket despite strong quarterly results. The quotations were pressured by restrictions on exports to China and debt burden after a large takeover, which restrains the potential for capitalization revaluation.

- Quotes of The Trade Desk (TTD) collapsed by more than 16%. The key trigger for the decline was the expected slowdown in revenue growth to 10.1% in the current quarter. This signaled a structural negative impact from customers in the automotive and consumer discretionary sectors.

Trades on February 25 on American stock exchanges ended in a steady plus. S&P 500 grew by 0.81%, NASDAQ 100 added 1.41%, Dow Jones rose by 0.63%, Russell 2000 strengthened by 0.41%.

The major technology companies were the growth drivers. Expectations of a strong report from NVIDIA (NVDA: +1.41% at the close of trading on February 25) supported buyers. Securities of memory chip and software makers continued to recover. Microsoft (MSFT: +2.98%) was the best performer of the "Magnificent Seven," confirming the concentration of demand for megacap stocks. The equal-weighted S&P 500 (RSP) notably underperformed the capitalization-weighted index (SPY). The RSP closed about 75 bps weaker than the SPY, showing the concentration of growth in the largest companies.

The IT industry (XLK: +1.92%) became the leaders of growth on the background of the mentioned dynamics of microelectronics and software manufacturers and the financial sector (XLF: +1.75%) due to the recovery of quotations of banks and investment companies. Industrial companies (XLI: -0.78%) were the outsiders. The pressure on their quotations was exerted by shares of representatives of road and railroad infrastructure, machine building and construction materials.

Macroeconomic background on Wednesday, February 25, was neutral. Comments of the Fed representatives did not add new guidance. Representatives of FRB Richmond and Kansas City again noted that inflation is not slowing down fast enough and the regulator needs additional evidence of steady decline in price pressure. At the same time, the monetary authorities assess the situation in the labor market as favorable. This serves as a basis for forecasting the preservation of the current parameters of monetary policy at the next meetings of the Federal Open Market Committee (FOMC).

A weak $70 billion five-year Treasury bond offering also deterred buying: demand was the lowest since July and the spread to the secondary market was the widest in months, adding to the tension in the duration section.

Import tariffs remain in focus, with the Office of the U.S. Trade Representative (USTR) confirming that America's presidential administration is preparing a formal decision to raise certain import duties to 15%.

- The board of directors of Warner Bros. Discovery (WBD: -0.86%) found Paramount Skydance's (PSKY: -2.21%) updated offer of $31 per share potentially more favorable. However, the existing merger agreement with Netflix (NFLX: +6%) remains in place and the board remains supportive of the deal.

-Thomson Reuters (TRI: +10.3%) announced a $600 million share repurchase program and an additional $605 million return of capital.

- United Therapeutics (UTHR: +13%) beat guidance on fourth-quarter earnings, while weakness in revenue and sales of the drug Tyvaso was expected as it was driven by seasonal factors. Investors shifted their attention to upcoming data on TETON-1 and Ralinepag funds.

-Circle Internet (CRCL: +35.5%) reported better than expected adjusted EBITDA and revenue, as well as RLDC margin (revenue excluding distribution costs). In addition, successes in the issuance of stablecoins were noted, as well as progress in preparing for the launch of the Arc blockchain network.

- Clear Secure's (YOU: +39%) revenue, booking volumes and free cash flow exceeded consensus for the latest quarter. Management noted strong growth in CLEAR Travel and CLEAR1 services. The company raised its dividend and expanded its buyback program by another $125 mln.

-Jazz Pharmaceuticals (JAZZ: +13.2%) beat average market expectations in terms of revenue and profit. The growth was driven by the launch of Modeyso and Epidiolex sales exceeding $1 billion. The 2026 guidance includes a 2.5% increase in revenues, which was welcomed by investors given the lower-than-expected SG&A cost guidance.

This article was AI-translated and verified by a human editor