Here is Schwab's early look at the markets for Thursday, February 26.
Nvidia's earnings late Wednesday rounded out reporting season for the Magnificent Seven, and shares of the AI giant initially made light gains as its quarterly numbers topped estimates. . Results from the biggest U.S. company capped a solid day on Wall Street that saw the broader market post its highest close since February 9, though much of that reflected mega-cap strength going into Nvidia's report.
Nvidia reported fiscal fourth quarter earnings per share of $1.62 and revenue of $68.13 billion.
Consensus was for $1.53 a share and $66.1 billion.
Guidance also came in ahead of expectations, with Nvidia seeing fiscal first quarter revenues between $76.44 billion and $79.56 billion. compared with analysts' projections of $72.6 billion.
Gross margin, another item under scrutiny for Nvidia, came in at 75%, as the company had forecast, and up from 73.4% the prior quarter.
"Nvidia's beat for the quarter was good enough, which was largely expected," said Nathan Peterson, director of derivatives research and strategy at the Schwab Center for Financial Research, or SCFR. "Gross margins were in line at 75%, which is good news given the concerns around memory pricing, and guidance for the upcoming quarter looks solid at $78 billion, plus or minus 2%, versus the LSEG estimate of $72.6 billion."
He added, "Guidance $5 billion to $6 billion above estimates is very healthy, an indication of still strong demand for compute."
Earnings from software firms Salesforce and Snowflake also arrived late Wednesday, with Salesforce initially coming under light pressure in post-closing bell action despite easily exceeding analysts' earnings per share consensus and matching consensus on revenue. Its guidance for first quarter earnings and revenue also narrowly beat consensus from FactSet. The company also increased its dividend and reported strong annual growth for its Agentforce AI agent platform.
Snowflake also fell about 3% initially after its report Wednesday despite earnings and revenue topping analysts' estimates.
Weakness in light of these kind of results suggests the software sector remains a target for investors worried about AI substitution.
Wednesday's software results followed a reassuring presentation earlier this week from Anthropic, which said it wants partnerships with the industry, not conflict, and demonstrated features allowing companies to integrate its "Claude" agent.
Though the market's cut a path through the biggest thicket of earnings this week, corporate results continue today with expected reports from Dell, Autodesk, and CoreWeave among others. Autodesk offers another look at the shaky software industry, while Dell's become an AI canary in the coalmine based on demand for its servers.
Though the general mode lately has arguably been to shoot first and ask questions later when it comes to the AI-battered software sector, investors might ultimately want to sort out winners from losers. The Anthropic presentation might help, highlighting areas where AI and existing firms can combine resources. Certain software companies might enjoy growing demand from AI agents harnessing their proprietary technology to sort through and build data. It's not a one-way street.
Turning from AI data to old-fashioned economic data, today features weekly initial jobless claims before the open followed by the January Producer Price Index, or PPI, tomorrow morning. December PPI was hotter than expected and appeared to spill into last week's warm December Personal Consumption Expenditures, or PCE, price data.
For PPI, consensus is 0.3% monthly growth in both headline and core readings, with core excluding food and energy. Expected annual PPI growth of 3% would be down from 3.3% in December but still way above the Federal Reserve's preferred 2% pace.
Consensus for jobless claims is 211,000, according to Briefing.com, near recent lows.
PPI and next week's parade of jobs data could affect the market's view of the rate path. For now, chances of a Fed rate cut next month are practically nil, according to the CME FedWatch Tool. By mid-year, futures trading builds in 50-50 chances of at least one rate cut, down from a week ago possibly due to last week's stubborn inflation data and hawkish Fed speakers since then.
"For now, the Fed looks to be on hold," said Kathy Jones, chief fixed income strategist at SCFR. "The labor market is the key to future rate moves. Currently, while hiring is slow, the unemployment rate remains quite low. Consequently, there isn't a big motivation for the Fed to change policy near term."
The U.S. 10-year Treasury note yield rose slightly Wednesday to 4.05%, still near recent lows, after a 5-year Treasury note auction drew tepid demand. It was the second auction this week where buyers seemed reluctant following a poorly received 2-year note auction Tuesday. While two auctions aren't a trend, more of the same next week could imply that participants have begun demanding higher yields to hold Treasuries, a bearish development.
It might be tough for the 10-year yield to maintain any moves below 4%, as last year's low wasn't far under that and descents under that key level didn't typically last long in 2025. A major load of U.S. government and corporate debt mean surging supply, so it might take far weaker economic data to push yields down much.
"Treasury yields continue to tread water, caught between the resilience of the economy and potential for rate cuts down the road. However, the recent data domestically and globally suggest that there isn’t a lot of room for yields to fall," Jones said.
Technically, the S&P 500 Index remains in consolidation, firmly rangebound between 6,800 and 7,000. The tech-heavy Nasdaq 100 Index hasn't forged a new high since late October, dragged by consistent weakness in software despite the recent rebound for that group.
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On Wednesday, major indexes climbed in relatively average volume, led by tech. Nvidia climbed sharply ahead of earnings and neared $200 per share for the first time in several months, helping the rest of the chip sector to vigorous gains. Solid gains for bitcoin and related stocks, along with other mega-caps, suggested investors were back in risk-on territory following their recent retreat. The week began with bullish sentiment relatively low and the Magnificent Seven down a combined 5% year-to-date.
Though at the index level Wednesday's session showed promise, sector strength wasn't as widespread as on Tuesday, suggesting a narrower rally embracing mainly high-market cap names. Whether that's a one-day affair or the start of a trend bears watching.
Six of 11 S&P 500 sectors rose Tuesday, led by some that slumped lately including tech and financials. Defensive plays like staples and retails sank, while utilities barely climbed. Bitcoin rallied 7% amid "risk-on" trading, and shares of Coinbase, a crypto-related stock, climbed 13%.
In individual trading Wednesday, GoDaddy plunged 14% even though quarterly earnings beat estimates. Revenue met expectations. Cautious guidance dragged shares, and bookings were below expectations in the fourth quarter.
Workday rebounded to post 2% gains after early losses. Earnings beat estimates and revenue matched consensus. Investors initially zeroed in on what analysts called poor guidance. In its call, the company pushed back on ideas that its technology could be replaced by AI.
Circle Internet Group, a payments technology firm, surged more than 30% after reporting stronger-than-expected earnings and revenue, though the stock remains well below the highs it reached after its initial public offering in mid-2025.
Cava Group zoomed up more than 26% as investors munched on better-than-expected results from the restaurant company. They also appeared to find its outlook appetizing as Cava guided for same-store annual sales growth between 3% and 5% in fiscal 2026.
First Solar shares dove 13% as the solar energy firm came up short with full-year sales guidance. In its release, the company referred to a "rapidly evolving environment."
Home builder stocks tumbled Wednesday despite steady Treasury yields and the lowest mortgage rates in months. A soft outlook from home improvement firm Lowe's, which fell 5% Wednesday, appeared to weigh. Lowe's said on its call it expects improvement in housing and home improvement markets to be "gradual," Barron's reported.
Oracle climbed 1.2% after receiving an upgrade to outperform from perform by Oppenheimer. The firm argued that Oracle is a strong EPS compounder and AI winner.
The Dow Jones Industrial Average® ($DJI) climbed 307.65 points Wednesday (+0.63%) to 49,482.15; the S&P 500 Index (SPX) gained 56.06 points (+0.81%) to 6,946.13, and the Nasdaq Composite® ($COMP) added 288.40 points (+1.26%) to 23,152.08.