Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Tuesday, Feb. 25. Today’s Stocks On The Contrarian Radar©️ features NVDA 0.00%↑ at the bottom of this page.
State of Play
Stocks dropped again yesterday. Tech saw the worst of it as the Nasdaq declined by more than 1%. The close of trading brought more bad news, with Hims & Hers (HIMS 0.00%↑) earnings disappointing investors and Trump tariffs on Canada and Mexico apparently back on.
As we eye our board of indicators for signs of direction at 0640, risk appetite is continuing to retrench, nowhere more visibly than in crypto land:
Cryptos are falling off a cliff. Bitcoin is down 8% to trade around $88,000. This is apparently good-old-fashioned risk off, if CNBC is to be believed. Not sure how or why tariffs should affect cryptos, but here we are;
Stock index futures are pointed lower, led by tech again with the Nasdaq down 0.3%;
Bonds are seeing a few bids in this flight to safety. The 10-year yield is down 5 basis points to 4.34% (yields move inversely to prices);
Commodities are flat, weirdly enough. WTI crude oil is unchanged trading at $70.50/barrel. Copper is up 0.2%.
Today’s Known Events
Earnings are the main story of the day again:
Home Depot (HD 0.00%↑) is already in, crucially offering an outlook below forecasts. That stock is dropping in the pre-market, down 2% at the time of this writing;
Planet Fitness (PLNT 0.00%↑) just beat estimates and initiated an outlook that appears to have failed to impress, as the stock is down in the pre-market;
Henry Schein (HSIC 0.00%↑), which we took a, um, shine to a few weeks ago, just missed on top- and bottom-line estimates. The supplier of dentistry equipment is dropping a bit in the pre-market, to the tune of 1% at the time of this writing. HSIC is still up over the past month however;
Keurig Dr. Pepper (KDP 0.00%↑) also reports before the open at 0930.
After the close at 1600 we’ll hear from Cava Group (CAVA 0.00%↑), AMC Entertainment (AMC 0.00%↑), Workday (WDAY 0.00%↑), Instacart CART 0.00%↑), and others.
Case-Shiller home prices are out at 0900. The 20-city index is expected to increase by 4.3% year-over-year for December, identical to last month (Case-Shiller is unfortunately a bit dated).
The Bottom Line
Market sentiment has suddenly turned pretty negative. Tech stocks are taking on water and former market darlings Hims & Hers (HIMS 0.00%↑) and Palantir (PLTR 0.00%↑) are getting beaten up. PLTR is down four days in a row, including 10% yesterday.
The earnings that have come in, especially HD’s lower-than-expected forecast for same-store sales, are certainly not helping. Remember that this whole thing was kicked off by the disconcerting outlook supplied by Walmart (WMT 0.00%↑) last week. HD lowering their outlook on top of this is clearly not good, though HD has a bit of a history of pessimistic outlooks.
Then we have the tariffs on/tariffs off trade. Tariffs are apparently back on, but as we’ve seen before this is by no means permanent. If anything is a buying opportunity, it’s probably the (over)reaction to tariffs. The question is why this is only being felt in the crypto market so far? Do cryptos maybe speak of something more sinister taking place when it comes to investor risk appetite? It is something to keep in mind…
Stocks On The Contrarian Radar©️
Nvidia (NVDA 0.00%↑) of course. The AI chipmaker reports earnings after tomorrow’s close. This could still rescue markets. If NVDA provides a positive outlook it’s hard to see how we don’t rally across the board. Tech would certainly regain its luster very quickly in such instance.
The Contrarian discussed this and the broader market sentiment with Phil Pecsok yesterday. That podcast is already available for premium subscribers. Check it out here:
Housekeeping
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