Stocks Closed Lower Yesterday, All Eyes On Earnings From NVIDIA And Analog Devices Today

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Stocks Closed Lower Yesterday, All Eyes On Earnings From NVIDIA And Analog Devices Today

	Profit from the Pros By Kevin Matras Executive Vice President
	Stocks Closed Lower Yesterday, All Eyes On Earnings From NVIDIA And Analog Devices Today Stocks closed lower again yesterday. Third down day in a row after the S&P 500 and Nasdaq hit new all-time highs last Thursday. The S&P is down -1.97% since then, while the Nasdaq is down -2.87%. But YTD, the S&P is up 7.42%, and the Nasdaq is up 11.3%. The small-cap Russell 2000 is not far behind with a YTD gain of 10.7%. Additional profit taking after heady gains over the last several weeks, in large part due to soaring earnings this earnings season, continued to weigh on stocks. But I'm not expecting that to last. Even though this earnings season is winding down, quarterly earnings for the S&P are on pace to be up 24.0% (Q1'26). But next quarter (Q2'26) is projected to show 21.3% EPS growth. Q3'26 is expected to be up 18.2%. And Q4'26 is projected to be up 20.1%. Pretty spectacular. And why calls for a 20%+ gain in the markets this year looks modest given the above. Big tech and AI earnings have been the star of the show. And are expected to continue to be. Yesterday we got earnings from retailer Home Depot before the open. They posted a positive EPS surprise of 0.88%, and a positive sales surprise of 0.67%. That translated to a quarterly EPS growth rate of -3.65% vs. this time last year, but a sales growth of 4.79%. They were up 0.88% yesterday. After the close we heard from restaurant chain operator Cava. They posted a positive EPS surprise of 17.65%, and a positive sales surprise of 4.48%. That equated to a quarterly EPS growth rate of -9.09% vs. this time last year, and a sales growth of 32.1%. They raised their full-year outlook, increasing same-restaurant sales to a midpoint of 5.5% growth vs. 4.0%; raised adjusted EBITDA to a midpoint of $186M from $180M; and raised projected new restaurant openings to a midpoint of 76 vs. the old forecast of 75. They were off -2.22% in the regular session before earnings. But were up by more than 7% in after-hours trade following earnings. But AI-related earnings will be back in the spotlight today. We'll hear from AI juggernaut this afternoon when NVIDIA reports after the close. But before that, we'll hear from another AI-linked company, Analog Devices, when they report before the open. In other news, yesterday's Pending Homes Sales Index was up 1.4% vs. last month's 1.7% and views for 0.9%. The index itself came in at 74.8 from last month's upwardly revised 73.8. Today we'll get MBA Mortgage Applications, the Atlanta Fed Business Inflation Expectations, and the FOMC Minutes from May's earlier Fed meeting. The FOMC Minutes will be the last insight into the Jerome Powell-led Fed, as that was his last meeting as the Fed Chairman. With his term ending on May 15th, Kevin Warsh will be at the helm when the next FOMC meeting takes place on June 16-17. Traders are cautiously watching developments in the Middle East. As you know, President Trump on Monday paused a "planned military attack" that was scheduled for Tuesday, at the request of Qatar, Saudi Arabia and the UAE, citing "serious negotiations" were taking place. The President has said "the clock is ticking" regarding Iran agreeing to a peace deal, or else "there won't be anything left of them." Middle East headlines can move the market. But short of that, the main event today will be NVIDIA's earnings and Analog Devices. See you tomorrow, Kevin Matras Executive Vice President, Zacks Investment Research
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