Stock futures are pointed lower, as traders return from the President's Day holiday, with dismal forecasts from Home Depot (HD) and Walmart (WMT) dampening sentiment. After popping last week amid hot inflation data and Fed fatigue, treasury yields are once more on the rise. At last check, Dow Jones Industrial Average (DJIA) and Nasdaq-100 Index (NDX) futures are indicating a triple-digit drop, while futures on the S&P 500 Index (SPX) look to move sharply lower as well.

Continue reading for more on today's market, including:.

• Podcast: Why stock education should be both fun and informative.
• Rate hike fears gripped Wall Street last week.
• Plus, more on HD and WMT earnings; and Generac stock downgraded.

5 Things You Need to Know Today

1. The Cboe Options Exchange (CBOE) saw more than 1.5 million call contracts and 1 million put contracts traded on Friday. The single-session equity put/call ratio rose to 0.67 and the 21-day moving average stayed at 0.79.
2. Home Depot Inc (NYSE:HD) earlier announced worse-than-expected fourth-quarter revenue, which cast a shadow on its profit win. The company also shared a disappointing 2023 outlook, with sales expected to be flat. HD is down 3.8% ahead of the open, and carries a 8.6% year-over-year deficit.
3. Walmart Inc (NYSE:WMT) was last seen down 3.5% premarket, after the company's full-year earnings forecast missed estimates. Walmart noted its efforts to attract consumers amid high inflation could squeeze profit margins. In the last nine months, WMT has added nearly 23%.
4. Truist Securities downgraded Generac Holdings Inc. (NYSE:GNRC) to "hold' from "buy" this morning. The analyst in question said a combination of higher interest rates and surging prices may threaten its financials this year. GNRC has shed 58.1% year-over-year. 

5. Today brings existing home sales, as well as the flash services purchasing managers' index (PMI) and the manufacturing PMI. 

European Markets Dip Amid Russia Tensions

Asian markets settled on both sides of the aisle on Tuesday. Hong Kong’s Hang Seng led the losses with a 1.7% drop, as tech stocks weighed on the benchmark, while Japan’s Nikkei shed 0.2%. South Korea’s trade deficit for February narrowed to $6 billion, while its exports to China fell 22.7%. The South Korean Kospi inched 0.2% higher, while China’s Shanghai Composite added 0.5%.

European markets are moving lower at last check, as investors eye tensions between Russia and Ukraine. Meanwhile, the U.K. reported a surprise budget surplus for January. London’s FTSE 100 and the French CAC 40 are both down 0.3%, while the German DAX is off 0.4%.

The Dow was able to pare some of its midday losses and close with a triple-digit pop, though it still turned in its third-straight weekly loss. The S&P 500 settled with its second-straight weekly loss, while the Nasdaq managed a modest win for the week. High inflation and rising rates were all the rage on Wall Street today, with Treasury yields hitting their highest level in three months. 

Continue reading for more on today's market, including:

• Here's what happened when we tried ChatGPT.
• Fed fears weigh on Wall Street.
• Plus, what's on deck next week; why DE bounced today; and Roku's double upgrade.

5 Things to Know Today 

1. The White House defended its response to the toxic freight train wreck in East Palenstine, Ohio, even as local leaders demand more help. (CNBC)
2. Used-car prices just rose at their fastest rate since 2021. (MarketWatch) 
3. All the earnings and data due out next week.
4. Why Deere stock soared today.
5. Roku landed a double upgrade after earnings.

Gold Futures Fall for Third-Straight Week

Oil futures fell 4.2% for the week, amid ample supply and growing concerns around global growth. For the day, March-dated crude shed $2.15, or 2.7%, to finish at $76.34 a barrel.

Gold futures fell for a third-straight week, briefly touching their lowest level of 2023 on Friday after the U.S. dollar gained strength. April-dated gold fell $1.60, or 0.1%, to settle at $1,850.20 per ounce for the session, and shed 1.3% for the week.

Wall Street grew increasingly wary of the Fed's hawkish stance throughout the week. Monday started off on a high note, before the consumer price index (CPI) and retail sales data for January injected interest rate fears into the market, though all three major benchmarks inched their way into positive territory by Wednesday's close. Sentiment soured again after a hotter-than-expected producer price index (PPI) and jobless data pointed to potential rate hikes, with the Dow Jones Industrial Average (DJI) seeing its worst daily drop in nearly a month. At the time of this writing, the Nasdaq Composite Index (IXIC) was the only index not eyeing a weekly loss. 

Analyst Calls This Week

We honed in on several analyst notes this week. For one, Evercore ISI upgraded Zillow (ZG), with the analyst in coverage betting on a rapid recovery for the housing market. XPO (XPO) saw several bear notes after its earnings report, while cybersecurity name Palo Alto Networks (PANW) and Occidental Petroleum (OXY) both moved higher following analyst praise. Roku (ROKU) received a double upgrade on Friday, but there's still plenty of pessimism surrounding the equity. 

Stocks Making Headlines

Coca-Cola (KO) took the spotlight this week with its fourth-quarter earnings report, while Upstart Holdings (UPST) and Shopify (SHOP) swung in opposite directions after their own reports. Meanwhile, G1 Therapeutics (GTHX) hit a record low after discontinuing a study, Silvergate Capital (SI) jumped after Citadel Securities revealed a passive stake of about 1.7 million shares, and Virgin Galactic (SPCE) completed its first test flight in over 15 months. Lastly, Ford Motor (F) attracted options traders amid company updates. 

President's Day Week Ahead

There is a handful of economic indicators and earnings due out over the holiday-shortened week, including quarterly results from Walmart (WMT). Schaeffer's Senior Quantitative Analyst Rocky White took a look at how stocks typically perform during President's Day Week, and complied a list of outperforming stocks, including electricity name Pinnacle West Capital (PNW). Plus, here's a silver lining to last week's pullback.

Subscribers to Chart of the Week received this commentary on Sunday, February 12.

If you’re still smarting from the tech sector selloff of 2022, you wouldn’t be blamed for suspicion toward generative artificial intelligence (AI), Wall Street’s first buzz word of 2023. The sudden reversal of meme stocks through 2020-2021 should still be fresh in investors’ minds, not to mention every other fad in the last three decades—how is the Metaverse doing? Web3? But its investor malpractice to at least not give every fad some level of due diligence, to kick the tires. AI stocks must also be put under the microscope.

The meme stock, crypto, and metaverse crazes were fueled by rampant speculation on the margins. The survival and implantation of ‘The Next Big Thing’ ultimately comes down to tangible value, and you can’t deny that billions of people use search engines every day. The fact that Big Tech is locked in an AI arms race should signal that AI could be different from previous flavors of the week. Microsoft (MSFT) has invested billions of dollars in OpenAI, the natural language AI tech company behind ChatGPT. The devil works fast, but Bill Gates works faster; earlier this week, Microsoft unveiled an overhauled version of its Bing search engine, featuring a more souped up large language model than ChatGPT. MSFT added 1.5% this week, reclaiming the $2 trillion market cap level in the process.

Alphabet (GOOGL), fearing competition to the ubiquitous Google, responded with a demo of Bard, its own software version of ChatGPT. However, glitches marred the debut, resulting in GOOGL shedding 7.7% on Feb. 8. But with one of the largest AI research departments on the planet, don’t count Alphabet out for long. This is a company that pivoted to generative AI over six years ago; they are still the trailblazers. Jeff Bezos gets FOMO more than anyone, so you can’t disregard Amazon.com (AMZN). Tesla (TSLA) announced an AI robot at its company day last September to much derision. You know Elon Musk isn’t done there, if he can just get out of his own way.

To underscore just how much of a sleeping giant AI is, consider this stat from Precedence Research: “The global artificial intelligence (AI) chip market size was evaluated at USD 16.86 billion in 2022 and it is expected to hit around USD 227.48 billion by 2032, expanding at a CAGR of 29.72% from 2023 to 2032.” Like most disruptive technologies in their infancy, the buzz will eventually die down after the initial craze has cycled through the media. But if you’re long-term bullish on AI, any Big Tech stock with a stable valuation and fundamentals is worth a long look once the initial buzz dies down.

Like the internet in the early ‘90s, AI has the potential to be a paradigm shift for any tech company; you’re either making inroads with it or at risk of being left behind. Just ask Borders, which launched its own online business to compete with AMZN in a way-too-late 2008. It seems companies have learned their lesson because there are plenty of other companies to monitor. Over in China, Alibaba (BABA) and Baidu (BIDU) posted weekly gains of xx and xx respectively, after announcing their own AI bots. Palantir (PLTR) is a big player in the Big Data sector. IBM’s (IBM) Watson -- introduced way back in 2010 -- will likely get a facelift.

Semiconductor stocks like Micron Technology (MU) and Nvidia stand to benefit from widespread implementations of AI, since chips are the engine that powers the AI machine. Right now, programs like ChatGPT are burning through computer power. Per Tech Monitor: “A large language model such as GPT-3 requires a significant amount of energy and computing power for its initial training. This is in part due to the limited memory capacity of even the largest GPUs used to train the systems, requiring multiple processors to be running in parallel.” In other words, as semiconductors go, so too does AI. Companies that utilize machine learning like DocuSign (DOCU), Oracle (ORCL), Cloudflare (NET), and Snowflake (SNOW) also stand to benefit from AI developments in cybersecurity and cloud sectors. Investing in any of the above companies is a savvy way to take a flier on AI without overcommitting.

In the shorter term, there are some specialized AI stocks out there with lingering upside right now. C3.ai (AI) has added roughly 107% in 2023 alone, yet still has 9.1% of its total available float sold short and nine of 11 analysts rate the stock a “hold” or worse. Canaccord Genuity just initiated coverage on SentinelOne (S) with a “buy” rating and $20 price target, yet a healthy 8.3% of S’ total available float is sold short. Penny stocks SoundHound AI (SOUN) and BigBear.ai (BBAI) are two other names to watch, the latter of which secured a $900 million pact from the Air Force last month.

Google Trends shows ‘AI’ search terms steadily grew through 2022 and exploded in 2023, but the technology behind generative AI is still very much at the ground floor. Eager to test it out ourselves, below are the results after asking ChatGPT about the benefits of options trading (attempts at getting ChatGPT to predict the Super Bowl or Waste Management Open winner proved futile). Emboldened by a decent response, I then asked ChatGPT to write a haiku about options trading, and that’s where the train went off the tracks, per below. A quick refresh produced a haiku, albeit a rather lame one. The whole experiment was a stark reminder that while AI presents some exciting opportunities for investors, its global impact still has a long way to go.

FREE: Schaeffer’s Top 2023 Stock Picks!

Schaeffer's Market Mashup Podcast: Threading the Needle With Joe Hargett

Zillow Group Inc (NASDAQ:ZG) is trading at $44.24 premarket, adding 4.8% following a bull note from Evercore ISI.

Specifically, the brokerage upgraded ZG to "outperform" from "in line" and raised nearly doubled its target price to $61, saying the shares could add 40% on a "rapid recovery" in the housing market. "We are in significant part making a macro call here -- that the housing market is either already beginning to recover or will very soon do that," Evercore said according to CNBC.

Zillow's upcoming earnings report will certainly shed some light on the situation. The online real estate brokerage is set to report earnings after the close on Wednesday, Feb. 15. The equity tends to dip following trips to the earnings confessional, finishing five of its last eight post-earnings sessions lower. Regardless of direction, Zillow stock swung 10.3% over the last eight quarters; this time around, the options pits are pricing in a slightly larger move of 12.4%.

Analysts are relatively split towards ZG, leaving plenty of room on the bullish bandwagon. Coming into today, 10 of the 18 covering brokerages recommended a "hold" or worse. The 12-month average target price of $42.23, meanwhile, is a razor-thin premium to Friday's close.

On the charts, ZG is poised to open above the $44 level -- an area that it's managed to trade above briefly earlier this month after nearly a year below the level. The equity is also moving above a host of short- and long-term moving averages, and already stands 35% higher in 2023. 

Another red-hot inflation report pressured Wall Street lower Thursday, with the Dow's dip accelerating in the final hour of trading to close more than 430 points lower -- its worst daily drop in nearly one month. The S&P 500 and Nasdaq also finished in the red, after jobs data fell unexpectedly, spurring worries about the Federal Reserve's future interest rate moves.

Continue reading for more on today's market, including:

• Can Hershey stock hit a new record high?
• Analysts looked toward these 3 stocks today.
• Plus, Virgin Galactic's test flight; Shopfiy's revenue forecast; and Paramount Global's earnings whiff. 

5 Things to Know Today 

1. The three unmanned aerial objects that were shot down by the U.S. military were "most likely tied to private companies, recreation or research institutions," said U.S. President Joe Biden. (CNBC)
2. Tesla (TSLA) is voluntarily recalling more than 360,000 vehicles, after saying its experimental self-driving software may cause crashes. (MarketWatch) 
3. How options traders reacted to Virgin Galactic's test flight. 
4. Shopify's disappointing revenue forecast dragged the shares.
5. Paramount Global's quarterly miss weighed.

Oil Falls for Third-Straight Session

Oil futures closed lower for a third-straight session Thursday, as inventories in the U.S. continue to tick higher. Specifically, March-dated crude shed 10 cents, or 0.1%, to finish at $78.49 a barrel.

April-dated gold added $6.50, or 0.5%, to settle at $1,851.80 per ounce for the session, thanks to the greenback.