Market News 27 FEB
Nvidia Reports and US Budget Decisions
Trading on the US stock market ended mixed on Wednesday. The S&P 500 index showed a slight gain (+0.01%), the Nasdaq 100 strengthened by +0.22%, while the Dow Jones declined by -0.43%. The market was driven by strong corporate earnings reports, particularly from tech companies.
Nvidia Record-Breaking Financial Performance
In Q4 FY2025, Nvidia reported revenue of $39.3 billion, marking a 78% increase from the same period last year and a 12% rise from the previous quarter. Net income for the quarter reached $22.1 billion, up 80% year-over-year. These figures surpassed Wall Street expectations, which had anticipated revenue of $38.1 billion and net income of $19.6 billion.
The company’s data center segment was a significant contributor, generating $35.6 billion in revenue—a 93% increase from the previous year. This growth underscores the escalating demand for Nvidia’s AI and cloud computing solutions.
Top Gainers and Losers
Among the top performers were Axon Enterprise (+15%), Super Micro Computer (+12%), and Intuit (+12%). These companies reported better-than-expected earnings and provided positive forecasts for the current year. ZoomInfo Technologies also surged by 23%, delivering strong quarterly results and improved annual profit projections.
On the downside, health insurance companies faced pressure after the Wall Street Journal reported on potential stricter regulations for Medicare Advantage plans. Centene led the decline (-7%), followed by Molina Healthcare (-6%), Universal Health Services (-4%), HCA Healthcare (-3%), and Elevance Health (-3%).
Additionally, Grocery Outlet plummeted by 30% due to weak annual profit forecasts, while AppLovin (-12%) and Zeta Global (-13%) suffered from negative analyst reports.
Budget Compromise and Market Impact
Republicans in the US House of Representatives passed a budget proposal that includes significant cuts to social programs, aiming to free up resources for $4.5 trillion in tax breaks. This development helped the market stay afloat, but uncertainty over further decisions in the Senate and potential political disputes remain a risk.
The budget bill passed with a narrow margin (217 to 215 votes) and proposes increasing the US debt ceiling by $4 trillion, which would prevent a potential default this summer.
Signs of Weakness and Fed’s Tightening Policy
Macroeconomic statistics fell short of expectations. New home sales in January dropped by 10.5% MoM, and mortgage applications decreased by 1.2%. Moreover, Atlanta Fed President Raphael Bostic advocated for further monetary policy tightening, putting additional pressure on the stock market.
Copper Under Pressure from US Policy
Copper prices rose by more than 1%, reaching a one-and-a-half-week high after President Trump initiated a review of potential tariffs on copper imports. This had a positive impact on mining sector stocks and copper producers.
Bond Market Dynamics: Yields Decline
Treasury bonds rose to a 2.5-month high, while the 10-year bond yield fell to 4.251%. This was driven by weak economic data, lowering inflation expectations, and successful US Treasury auctions that boosted investor interest in bonds.
European bonds also strengthened, with 10-year German bond yields reaching their lowest levels.