Morning Minutes

Indices Rebound as Investors Digest Technology and Retailer Earnings



Trying to bounce back from yesterday’s 0.2% to 0.6% declines for US indices, US index futures are up 0.1% to 0.5% this morning. Asia Pacific markets fell overnight, particularly the Hang Seng with a 1.3% drop, while European indices are flat to down slightly. Commodity action is mixed with Natural Gas up 1.9%, oil flat, and copper down 0.6%. Gold is down 0.25% while Bitcoin is down 2.4% and trading back under $60,000.

Two of the largest US technology companies reported results overnight. Nvidia* has jumped 8.5% in premarket trading after the graphics chip maker beat street estimates for EPS ($1.17 vs street $1.11) and sales ($7.1B vs street $6.8B). Results were boosted by demand from cloud computing companies for use in their data centers, and from video gaming on the consumer side. Network equipment producer Cisco Systems, on the other hand, is down 6.5% premarket. Despite beating expectations on EPS ($0.82 vs street $0.80), sales ($12.9B vs street $13.0B), and sales growth guidance for next quarter (4.5%-6.5% vs street 7.4%) fell short of expectations.   

Retailer earnings continue to roll in above expectations, headlined today by Macy’s, which has jumped 11.2% in premarket trading after the department store chain crushed earnings expectations ($1.23 vs street $0.31) on strong same store sales growth (35.6% vs street 29.3%) and boosted its EPS forecast for this year ($4.57-$4.76 vs previous $3.14-$3.75). Other US retailers beating expectations today include Kohls ($1.65 vs street $0.64, up 9.6% premarket), Victoria’s Secret ($0.81 vs street $0.71, up 11.5% premarket), and Bath & Body Works ($0.92 vs street $0.60, up 4.8% premarket).

In Canada this week, the focus has been on grocers who in their reports and management commentary, highlighted some interesting themes, including: food costs and related inflation pressures continue to rise, after going to restaurants in summer, consumers seem to be cooking more at home again into the fall (which impacts sales volumes for grocers), and that the additional costs of doing business under COVID appear to be in decline.

* Shares of Nvidia are held in portfolios managed by SIA Wealth Management    

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
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