US markets slump on Nvidia and tariff threat

It was a tough week for US markets and technology stocks in particular as concern about tariffs mounted and Nvidia's latest earnings failed to impress.

Big losses for the Nasdaq Composite put the tech-heavy index in the red for the year, while the Dow Jones Industrial Average, which has a lower weighting towards the sector, traded only modestly lower.

Shares in pharmacy operator Walgreens Boots Alliance were higher amid continuing speculation about a deal to take the group private. US healthcare outfit Solventum was also in demand ahead of its results.

Meanwhile electric vehicle maker Tesla stalled after the firm delivered a particularly downbeat European sales report for January. Sales of Tesla vehicles across the UK, EU and EFTA (European Free-Trade Area) slumped 45% last month to 9,945 units, with a 50% fall in the EU alone as the company faces growing competition from Chinese manufacturers.

The US manufacturer is not only facing challenges in the European market – early reports suggest the long-awaited automated driving upgrade to its Chinese-market models has left owners disappointed.

Nvidia

AI chip maker Nvidia shares took a pounding despite it beating fourth-quarter earnings.

The company's revenue of $39.3 billion and EPS (earnings per share) of $0.89 topped Wall Street estimates and Nvidia anticipates its total first quarter revenue will be $43 billion, ‘give or take 2%’ compared to Wall Street estimates of $42.7 billion.

However, this wasn't sufficient to quieten concern about potential Nvidia customers developing their own chips in-house and the threat posed by China's DeepSeek which might make it possible to run AI models with less expensive tech.

There were other areas to consider in the results too, including a big growth in trade receivables to $23.1 billion in Q4 versus $10 billion a year earlier. This is money owed to Nvidia by its customers following the sale of goods and services on credit.

This isn't necessarily unusual but could be an area of vulnerability if demand starts to ease in a meaningful way.

Home Depot

Just days after big box retailer Walmart flagged a potential sales slowdown, Home Depot signalled a similar trend with its fourth quarter and full year results (25 February).

Home Depot’s shares ticked up to $400 after fourth quarter results topped estimates, with EPS (earnings per share) of $3.02 coming in ahead of the $3.01 consensus on revenue up 14.1% year-on-year to $39.7 billion, above the $39.16 billion Wall Street was looking for.

Despite a higher interest rate environment impacting home improvement demand, comparable sales edged up 0.8% after eight straight quarters of declines. ‘Our fourth quarter results exceeded our expectations as we saw greater engagement in home improvement spend, despite ongoing pressure on large remodelling projects,’ explained CEO Ted Decker.

However, the stock drifted to end the week lower as investors digested the DIY product giant’s mellow guidance for full year 2025 sales growth of 2.8% and comparable sales growth of a mere 1%.

Keurig Dr Pepper

Soft drinks giant Keurig Dr Pepper gave investors a roller-coaster ride this week.

The shares fizzed up more than 5% on 25 February after fourth quarter earnings came in ahead of estimates, and the company forecast annual profit above Wall Street expectations.

The excitement fizzled out on 27 February after leading shareholder JAB Holdings announced the sale of 145 million shares at a 3% discount, reducing its stake to 10.7% from 16%.

JAB became the leading shareholder through its private ownership of Keurig Green Mountain which merged with Dr Pepper Snapple in 2018.

Fourth quarter net sales increased 5.2% to $4.07 billion topping Street estimates of $4.02 billion while adjusted EPS (earnings per share) was up 5.5% to $0.58.Dr Pepper’s CEO Tim Cofer said: ‘In 2024, we delivered strong financial performance consistent with our long-term algorithm and advanced our strategy to lay the groundwork for KDP’s next phase of growth.’

The shares are up 4% so far in 2025 and have gained 13% over the last year.