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US equity futures indicate a weak start to the trading day and are being influenced by several disappointments relative to consensus earnings reports last night, including Palo Alto Networks (PANW) (more below). More companies are reporting this morning, but the market’s attention will be more on what three Fed speakers have to say although we expect them to stick to the Fed’s current playbook. This afternoon brings the Fed’s January meeting minutes at 2 PM ET, but our thinking is the comments will be only modestly constructive given the recent spate of figures showing inflation remains far stickier than many thought it would. Still, comments on what economic conditions could spur the Fed to start cutting interest rates could be helpful, but here too, so far, the US economy continues to defy expectations even with Fed policy in restrictive territory. 

After today’s market close, following the parabolic move in its shares, the market will be laser-focused on quarterly results and guidance from Nvidia (NVDA). Consensus expectations have the company guiding 2024 EPS to $22.07 up from $12.42 in 2023 and $3.34 in 2022. Given its weighting in both the S&P 500 and the Nasdaq Composite, 4.24% and 5.03%, respectively, the market reaction to Nvidia’s result and guidance will undoubtedly trigger a healthy amount of aftermarket activity and set the tone for tomorrow’s trading. For the company that has been able to pivot from strength (video gaming) to strength (cryptocurrency mining) over the past decade, today’s earnings will serve as a barometer between AI hopes and reality.

• Amazon (AMZN) will join the Dow Jones Industrial Average (DJIA) before the start of trading on Feb. 26, replacing Walgreens Boots Alliance (WBA) in the first change in the 30-stock index since 2020.

• Shares of Palo Alto Networks (PANW) fell in aftermarket trading last night as downside guidance overshadowed the company’s January quarter top and bottom line beat. For 2024, the company sees EPS of $5.45-$5.55 on revenue between $7.95-$8.00 billion compared to the consensus forecast of $5.52 on $8.19 billion in revenue. Full-year bookings are targeted between $10.10-10.20 billion, down from Palo Alto’s prior guidance of $10.70-$10.80 billion. On the company’s earnings call, management shared it expects weakness in its US Federal government business to continue in the coming quarters but “the threat landscape continues to challenge our customers with increasing scale and sophistication of attacks.”

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