US OPEN: Wall Street opens lower after a long weekend

• Wall Street indices open lower
• US30 tries to climb back above 23.6% retracement
• Home Depot drops after fiscal-Q4 earnings
• Intel and Globalfoundries gain on semiconductor incentives
• Discover Financials rallies on Capital One merger

Wall Street indices launched the first cash session of a new week lower. S&P 500 opened around 0.3% lower, Dow Jones dropped 0.2%, Nasdaq declined 0.5% and small-cap Russell 2000 trades over 1.3% lower. Globalfoundries and Intel on White House incentives for domestic semiconductor manufacturers while Home Depot drops slightly after release of fiscal-Q4 earnings. Economic calendar for the US session today is empty and markets seem to be awaiting two key events scheduled for tomorrow - FOMC minutes and Nvidia earnings

Source: xStation5

Dow Jones futures (US30) are trading around 0.3% lower today. Taking a look at the chart at H1 interval, we can see that the first attempt to break back above the resistance zone, marked with 23.6% retracement of the upward move launched in mid-January 2024, turned out to be a failure. Another attempt is being made at today's cash session launch. Should we see that price climb above the zone, the next important short-term resistance can be found around 0.6% above current market price, in the 39,000 pts area. On the other hand, should bears regain control and push the index lower, the next support zone to watch can be found in the 38,350 pts area, marked with the 38.2% retracement.

Company News

Home Depot (HD.US) is trading lower after reporting fiscal-Q4 2024 results earlier today (calendar November 2023 - January 2024 period). Company reported 2.9% YoY drop in net sales to $34.79 billion (exp. $34.61 billion) as well as 3.5% YoY drop in comparable sales (exp. -3.6% YoY). Merchandise inventories came in at $20.98 billion (exp. $23.31 billion) while total number of locations increased 0.6% YoY to 2,335. Number of customer transactions declined 1.7% YoY (exp. -3.6% YoY) while average ticket declined 1.3% YoY to $88.87 (exp. -0.4% YoY). In spite of a drop in sales, company saw a 2% YoY increase in Selling, General & Administrative expense (SG&A) to $6.68 billion (exp. $6.7 billion). EPS came in at $2.82 and was significantly lower than $3.30 reported a year ago. Quarterly dividend was increased 7.7% to $2.25 per share. Home Depot expects fiscal-2025 comparable sales to drop around 1% and operating margin to reach around 14.1%. 

Home Depot (HD.US) launched today's trading lower, following release of fiscal-Q4 earnings. Stock is pulling back from the resistance zone marked with 61.8% retracement in the $360 area. However, stock started to recover losses after session launched. Source: xStation5

Discover Financial (DFS.US) rallies over 10% today. It was announced that Capital One Financial (COF.US) will acquire the company in a $35 billion all-stock merger. Shareholders will receive 1.0192 Capital One shares for each share of Discover Financial they own. Transaction is expected to close in late-2024 or early-2025 and be 15% accretive to adjusted non-GAAP EPS in 2027. Combined equity will become the biggest US credit card company by loan volume.

Intel (INTC.US) and Globalfoundries (GFS.US) gain today on reports of US subsidies to domestic semiconductor companies. According to a Bloomberg report, Globalfoundries may receive $1.5 billion in incentives from Chips Act and another $1.6 billion in loans for expansion of manufacturing facilities. Intel may receive over $10 billion in incentives. US administration plans to offer a total of $39 billion in direct grants and up to $75 billion in loan guarantees through Chips and Science Act, which is aimed at supporting domestic chip production.

Analysts' actions:

• Intel (INTC.US) rated 'buy' at Citic Securities. Price target set at $55.00
• Freshworks (FRSH.US) upgraded to 'outperform' at Wolfe. Price target set at $27.00
• US Foods Holdings (USFD.US) upgraded to 'overweight' at Piper Sandler. Price target set at $59.00
• SSR Mining (SSRM.US) downgraded to 'underperform' at RBC. Price target set at $3.00

Globalfoundries (GFS.US) launched today's trading with a bullish price gap. Stock is supported by news saying it will receive large incentives from US authorities to boost chip production capacity. However, stock began to erase gains following session launch and the $50-61 trading range remains intact. Source: xStation5