Sky High Tech Stock Valuation Keep Investors Defensive Ahead of Nvidia Earnings, Palo Alto Plunges 20%

Barry Adams
21 Feb, 2024
New York City

Market sentiment was negative for the second day running, and tech stock valuations were in focus ahead of Nvidia's quarterly results. 

The S&P 500 index declined 0.3% and the Nasdaq Composite dropped 0.5%, extending losses in the previous session. 

Palo Alto Networks plunged more than 20% after the cyber-security company lowered its annual revenue outlook. 

Investors have turned cautious amid growing worries about a narrow market rally over the last nine weeks, as most of the market gains are driven by a few mega-cap tech stocks.

On the earnings front, investors are looking ahead to quarterly results from Analog Devices and Wingstop before the market opens and Nvidia and Etsy after the regular trading session. 

HSBC said fourth-quarter earnings fell sharply after the UK-based and China-focused global bank took a $3 billion impairment charge linked to its investment in Shanghai-based BoCom. 

 

U.S. indexes and yields

The S&P 500 index decreased 0.3% to 4,981.28, and the Nasdaq Composite fell 0.5% to 15,550.39. 

The yield on 2-year Treasury notes decreased to 4.58%, 10-year Treasury notes inched down to 4.25%, and 30-year Treasury bonds edged down to 4.44%.

WTI crude oil decreased $0.30 to $76.58 a barrel, and natural gas prices increased 17 cents to $1.73 a thermal unit and rebounded from a low last seen in September 2020.

Gold increased by $5.58 to $2,029.11 an ounce, tracking lower yields on U.S. Treasury notes. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.11.

 

U.S. Stock Movers

HSBC declined 7.4% to $37.79 after the global bank said fourth-quarter earnings fell sharply and the bank announced a stock buyback program and an increase in its cash dividend. 

Palo Alto Networks dropped 23.8% to $279.01 after the cyber security company reported better-than-estimated fiscal second quarter revenue and earnings. 

However, the company lowered its revenue outlook in the fiscal third quarter to an increase between 13% and 15% and total billing growth between 2% and 4%. 

The company also lowered its full-year 2024 revenue outlook to between 15% and 16%, down from the previous estimate of between 18% and 19%. 

Diamondback Energy increased 0.8% to $179.50 after the energy company reported better-than-expected revenue and earnings in the fourth quarter. 

Caesars Entertainment decreased 0.1% to $41.60 after the hotel and resort operator reported weaker-than-expected revenue of $2.83 billion in the previous quarter. 

Solar Edge plunged 20% to $67.37 after the solar inverter maker reported weaker-than-expected revenue of $316 million, but losses narrowed in the fourth quarter. 

Walgreens Boots Alliance declined 2.9% after the company was replaced by Amazon in the Dow Jones Industrial Average effective Monday, February 26, according to index manager S&P Dow Jones Indices.