U.S. stock index futures indicated a positive market open, with investors' attention divided between a flurry of quarterly earnings reports and a record $42B 10-year Treasury note auction set for the afternoon. Amidst this backdrop, several stocks stood out in pre-market trading.
Alibaba (BABA, Financial) shares experienced volatility, initially rising after announcing FQ3 2023 results and a $25B boost to its share buyback program, only to fall 5% as the market opened. Despite a 2.1% year-over-year increase in FQ3 sales to $36.67B, some analysts and investors were left underwhelmed by the revenue figures. Alibaba's position as the most valuable Chinese e-commerce firm was recently overtaken by PDD (PDD).
Target (TGT, Financial) shares were up 2% in premarket trade as the company explores a paid-membership program, dubbed Project Trident, to compete with Amazon (AMZN) and Walmart (WMT). The program may include Target’s grocery-delivery service, Shipt, and could launch as early as this year. While it may not replicate the success of Amazon's and Walmart's membership programs, Target aims to leverage its unique product offerings and in-store pickup to attract consumers.
Nvidia (NVDA, Financial) received a price target increase from Morgan Stanley, with the firm anticipating further gains in artificial intelligence for the semiconductor giant. The new price target suggests a 10% upside, driven by tight GPU cloud instances and long waiting lists for model training, indicating strong demand for Nvidia's offerings.
Several Chinese stocks, including JD.Com (JD, Financial), Bilibili (BILI, Financial), and Baidu (BIDU, Financial), traded lower following Alibaba's (BABA, Financial) revenue miss. Despite beating some estimates, Alibaba's revenue growth and earnings per American depositary share did not meet all analysts' expectations, reflecting the intense competition in the Chinese e-commerce space.
On the earnings front, Warner Bros. Discovery (WBD, Financial) is set to report Q4 results on Feb. 23, amidst speculation about its interest in acquiring Paramount Global (PARA). Meanwhile, Ares Capital (ARCC, Financial) posted better-than-expected Q4 earnings, with interest income from investments driving its net investment income up.
Traders at J.P. Morgan have shifted their stance on U.S. stocks, moving from cautious to "tactically bullish" on U.S. equities. This change in sentiment contrasts with the global strategy team's consistent warnings about stretched valuations in tech names and market optimism for a soft landing in the U.S.
Concerns are growing over the health of commercial real estate properties and the bank loans that support them, with financial regulators closely monitoring the industry. The higher interest rate environment poses challenges, particularly for community or regional banks holding a significant portion of CRE loans.
Ford Motor Company (F, Financial) saw its shares rise after reporting better-than-expected earnings and announcing a special dividend. The company's strong performance in its Pro business and potential EV strategy shift were key highlights, despite losses in the Model E segment.
TotalEnergies (TTE, Financial) reported Q4 earnings with a decline in revenue year-over-year but provided an optimistic outlook for 2024, expecting hydrocarbon production growth and an increase in refining utilization rate.
Mogo (MOGO, Financial) expanded its relationship with Snowflake (SNOW), utilizing the latter's Data Cloud for its Wealth products, while New York Community Bancorp (NYCB, Financial) appointed Alessandro DiNello as executive chairman to improve operations amid regulatory discussions.
CVS Health (CVS, Financial) lowered its 2024 outlook due to rising medical costs, despite reporting a revenue increase for Q4 2023. The company's Health Care Benefits segment saw significant growth, but the medical benefit ratio also increased, indicating higher medical expenses.
Rithm Capital (RITM, Financial) released its Q4 earnings, beating EPS expectations but missing on revenue, with a reported book value per common share of $11.90.
