The Buzz on Business for February 26th 2024

The NVIDIA party that kicked off on Wednesday faded on Friday, although NVIDIA itself, still out on the dance floor as the lights came up, managed a gain on the day. NVIDIA is up 240% in the last twelve months. 17% since Thursday morning.

Stock Market Report

Stocks finished mixed on Friday, although volume was light and advances led decliner by a substantial amount.

• The Dow Jones Industrial Average was up 62 points. That’s almost two-tenths of a percent, and they closed at 39,132.
• The S&P 500 was up a miniscule 1.8 points and closed at 5089.
• The NASDAQ composite had a rougher go of it. It was down 45 points. That’s about three-tenths of a percent and closed below 16,000 at 15,997.
• The small-cap Russell 2000 was up two-tenths and closed at 2014.

Bond Market Report

Bonds were also mixed; although rates were mostly lower on Friday,

• The 2-year treasury closed at 4.687%. That’s off three basis points.
• The yield on the 20-year was off seven ticks and closed at 4.507%.

Oil, Gold, and Bitcoin

• Oil continued in the trading range it’s been in for most of the last three months. It was off $1.75 and closed at $76.54.
• Gold was up $18.70, and a troy ounce will now set you back $2049.40.
• Bitcoin closed at $51,013.00, off $685.

Buzy News Week Ahead

Today begins what looks to be a busy week on both the earnings and economic calendars.

• Later today, we get building permits and new home sales for January. Housing has been strong but took a step backward last month. Could higher interest rates finally be taking a toll on the housing market?
• Tomorrow, we get the durable goods orders complex. Another peek inside manufacturing?
• Wednesday, we get the gross domestic product for the fourth quarter of 2023. Estimates are that the economy grew at a 3.3% annual pace in the December quarter.
• But everyone here at the Ministry of Truth will be huddled around the telescreens on Thursday at 8:30 AM Eastern Time when we get the PCE numbers. Many who had declared victory over inflation found themselves with egg on their faces earlier this month when the Consumer Price Index numbers came in way above expectations.

On the earnings front.

• Quarterly reports from Salesforce, Lowe’s, Macy’s, Best Buy, and Warren Buffet’s Berkshire Hathaway are all expected this week.
• We’ll also be looking at the announcement from Paramount Global on Wednesday afternoon to get a sense of the streaming market in light of Netflix’s fourth-quarter numbers two weeks ago, which sent the stock skyward.

Fourth Quarter Earnings Exceeding Expectations

Speaking of earnings, fourth-quarter earnings for the public companies in the United States look to blow out expectations. Recall that estimates at the beginning of the fourth quarter in early October were for a year-over-year decrease in corporate earnings. Throughout the quarter, several companies cut estimates. Walmart, in announcing third-quarter earnings, said their biggest business challenge for the fourth quarter was deflation and predicted a decrease in sales as a result.

And they were wrong, with about 90% of the S&P 500 companies reporting earnings per share are on track to rise a spectacular 10% year over year in the fourth quarter.

The implications of that number are very interesting, and we think it bodes well for stocks throughout 2024. But it probably means that the Federal Reserve will be in no hurry to cut interest rates. From where we sit this economy seems very strong, indeed.