Stock Futures Marginally Lower Ahead of Retail Earnings & Fed Minutes
On Wednesday morning, U.S. stock futures edged slightly lower following a day that saw the stock market snap a 5-session winning streak. This came after retail sales came in worse than expected in July 2021. Investors will be looking for an update from the Fed’s July policy meeting at 2 p.m. ET today. It will offer more indications of when the central bank may begin scaling back its easy-money policies that were adopted at the beginning of the pandemic. Apart from that, investors are also bracing for another set of potentially market-moving earnings data in the stock market today.
“You’re seeing a lot of economists and strategists on Wall Street now looking for some sort of catalyst here to get a sell-off, because we are going into what you would call the weaker part of the year for the market historically … But if you look at the overall economic data, if you look at profits this quarter, it’s kind of hard not to be bullish here.”– Ryan Payne, President of Payne Capital Management
Admittedly, there are lingering uncertainties in the stock market now. But many investors are still bullish on the economic recovery. As long as monetary policy remains reasonably accommodating and the vaccination rate continues to increase, there are reasons to believe that we could come out from this health crisis stronger. As of 6:11 a.m. ET, the S&P 500, Dow, and Nasdaq futures are on the dip, moving 0.14%, 0.26%, and 0.04% lower respectively.
Nvidia Earnings In Focus After The Closing Bell Today
Semiconductor manufacturer Nvidia (NASDAQ: NVDA) is set to report its second-quarter earnings this evening. If you have been looking for hot stocks to buy in the stock market, chances are NVDA stocks are one of them. After all, the company is a supplier of chips for various applications. And these include gaming, performing artificial intelligence computations, and cryptocurrency mining.
During the pandemic, the company’s revenue has been fueled by strong demand for its processors and also rising prices. These factors propelled the company to become one of the 10 largest U.S. public companies by market capitalization.
When Nvidia reports its earnings this evening, investors will be focusing on whether it can maintain its rapid growth. The key metric to pay attention to is its gross margin. Analysts are also projecting that the gross margin will rise relative to the prior year’s quarter. With expectations for Nvidia built up to incredible highs already, the company has a lot to prove in its earnings report. If you believe that Nvidia has a long-term secular growth story, would you be buying NVDA stock regardless of how its earnings turn out?
China Tech Stocks Under Threat As Regulators Unveil New Antitrust Rules
Chinese tech stocks, which have crashed during the escalating crackdown over the past nine months, fell further on Tuesday. In fact, China’s biggest tech companies lost more than $50 billion collectively in market value Tuesday. For instance, Alibaba (NYSE: BABA) stock declined 4.91% on Tuesday, its lowest close since October 2019. Meanwhile, Tencent (OTCMKTS: TCEHY) and JD.com (NASDAQ: JD) have also been hit hard.
This came after China’s State Administration for Market Regulation (SAMR) proposes sweeping new rules to further curb anti-competitive behavior among its internet giants. Some of the new guidelines prevent internet companies from adopting forced exclusivity and blocking competitors’ links and apps.
Alongside forced exclusivity arrangements, they also can’t take user data and algorithms to influence user choices. And operators can’t provide false data, such as the number of clicks on a piece of content. The new rules are slated to go into effect after public opinion on the new rules is received, ending on September 15. Till then, China’s uncertain regulatory environment continues to cast a show on its tech titans. Investors thinking of buying on dips might want to take some air before making any moves on these Chinese tech stocks.
Sea Limited’s Quarterly Revenue Tops Estimate
Southeast Asian retail giant Sea Limited (NYSE: SE) reported its second-quarter report that topped Wall Street’s estimates. Before we go into details, investors may need a short introduction to the company. Namely, Sea Limited is a leading global consumer internet company that is based in Singapore. The company operates via a wide array of consumer services. This ranges from its Shopee e-commerce shopping app and Garena gaming divisions to its SeaMoney fintech offerings.
Although Sea fell short of analyst projections for its second-quarter profit, the company beat sales expectations handily with revenue of $2.3 billion. This came in stronger than the $1.9 billion Wall Street had forecast. In fact, its sales numbers were impressive, with all the divisions showing triple-digit percentage gains. Specifically, Sea Limited saw year-over-year surges of 167% and 161% in its digital entertainment and e-commerce divisions respectively. And Sea said it won’t be slowing down for the rest of 2021, either.
More importantly, Sea also provided strong guidance, projecting 122% sales growth in e-commerce for all of 2021. Besides, Sea’s operating and net losses came in lower than the prior year quarter. All in all, as pandemic conditions remain mostly unchanged in its core markets, demand for Sea Limited’s offerings could persist. With the company’s strong revenue growth and healthy outlook for the rest of 2021, investors might want to take a chance on SE stock whenever there’s weakness in the stock.
Other Earnings To Keep An Eye On Today
A weaker-than-expected print on U.S. retail sales may have called into question the strength of the ongoing economic recovery. For instance, Home Depot (NYSE: HD) stock tumbled on Tuesday after the home improvement retailer said fewer customers visited its stores. While Home Depot’s quarterly profit and revenue topped Wall Street’s expectations, same-store sales came in slightly below expectations.
Some of the companies reporting earnings before today’s opening bell include Target (NYSE: TGT), Lowe’s (NYSE: LOW), and TJX Companies (NYSE: TJX). Alternatively, if you are looking to get in on earnings action after the closing bell, some of the notable tech names including Nvidia, Cisco (NASDAQ: CSCO), and Keysight Technologies (NYSE: KEYS) are hosting their second-quarter calls. Evidently, there is plenty to consider as the earnings week progresses along.