PriyankaUS stock futures remained largely unchanged ahead of Nvidia’s highly anticipated earnings release. Nvidia, a titan in the tech industry and a key player in the burgeoning field of artificial intelligence, holds a market value of $3 trillion and has been instrumental in the market’s upward trajectory over the past two years. The company is widely regarded as a benchmark for AI investment across the technology sector. Nvidia is expected to announce revenue growth exceeding 70% for the current quarter when it releases its earnings report after the market closes on Wednesday. Any disappointment in these figures could significantly impact the markets, given Nvidia’s substantial influence on U.S. indices.
As of 8:00 AM, S&P futures were flat, showing little change over the past week. Nasdaq 100 futures were slightly down, as Nvidia’s pre-market gains were offset by similar performances from other major tech stocks and semiconductor companies. Bond yields fell in response to a sharp decline in oil prices, while the U.S. dollar extended its gains from the previous day. Commodities were generally lower, with energy prices leading the decline, although base metals continued their recent upward trend. The macroeconomic focus today includes Federal Reserve speeches, bond auctions, and mortgage applications, which increased by 0.5% following a 10.1% drop last week.
In pre-market trading, Nvidia’s stock was flat but had surged about 160% this year, significantly outpacing the Nasdaq 100’s 16.4% gain. Bank of America saw a decline after Warren Buffett sold an additional $982 million worth of shares in the second-largest U.S. bank. Nordstrom’s stock rose by 8.3% following a stronger-than-expected earnings-per-share forecast. Super Micro Computer shares were poised to extend their losses after Hindenburg Research announced a short position in the server equipment manufacturer.
Nvidia’s earnings report is seen as crucial amid concerns about a potential U.S. recession and whether the Federal Reserve can cut interest rates quickly enough to engineer a soft landing. Money markets currently anticipate around 100 basis points worth of interest rate cuts this year, starting in September.
“The Nvidia result has become very much like a macro event, in some ways as big as the payrolls and CPI releases in terms of market impact,” said Justin Onuekwusi, Chief Investment Officer at wealth manager St James Place. “There’s a lot of money, a lot of leverage in these consensus names and it will take only a slight disappointment to cause significant volatility in markets.”
European stocks were solidly in positive territory, rising by 0.6% to reach their highest level since mid-July, led by chemical and insurance companies. GSK shares rose by as much as 2.8% after the drugmaker welcomed a decision by the Delaware Supreme Court to review a lower state court ruling related to the ongoing Zantac litigation, allowing the introduction of plaintiffs’ expert evidence at trial.
Earlier in the session, Asian stocks rose as technology shares gained ahead of Nvidia’s earnings report due later on Wednesday, which could shed light on the momentum of the current rally. The MSCI Asia Pacific Index advanced by up to 0.2%, with TSMC and Toyota Motor among the largest contributors. Shares in Japan and Taiwan edged higher, while benchmarks in China and Hong Kong fell following a series of disappointing corporate earnings. Nvidia’s earnings will provide insights into whether the AI frenzy has more room to grow. Expectations of interest rate cuts by the Federal Reserve have also benefited rate-sensitive tech stocks, with traders now turning their attention to next week’s non-farm payroll figures.
In foreign exchange markets, the U.S. dollar rose by about 0.2%, gaining against all G-10 currencies except for the Australian dollar, which remained flat after CPI exceeded estimates. Despite this, the greenback is still on track for its steepest monthly decline this year, weakened by expectations of rate cuts. Most other currencies lost ground, with the euro dropping by 0.5%. The Norwegian krone was the weakest, falling by 0.5% against the dollar.
In bond markets, U.S. Treasuries saw marginal gains across the curve, with 10-year futures surpassing Tuesday’s high in muted price action. The yield on 10-year Treasuries was around 3.81%, down by about 1 basis point on the day, while German bunds and U.K. gilts outperformed by 4 basis points and 2 basis points respectively. European rates outperformed U.S. Treasuries, supported by gains in German long-end rates. German bond gains were led by the long end of the curve, with 30-year yields down by approximately 5 basis points and spreads between 5-year/30-year and 2-year/10-year flatter by 1.5 basis points and 2 basis points respectively on the day. The U.S. session includes a $70 billion auction of 5-year notes following strong demand for Tuesday’s 2-year note sale.
In commodity markets, gold retreated by $15 to around $2,509 per ounce after a three-day advance that brought it closer to its all-time high. Brent crude futures dropped by 1%, adding to the previous day’s decline, while WTI fell by 0.9% to trade near $74.80 per barrel.
Bitcoin fell below the $60,000 level as part of a broad retreat in cryptocurrency markets that included a sharp drop in Ether, the second-largest token.
The U.S. economic data calendar is empty for today’s session; however, Fed speakers including Bostic are scheduled to speak at 6 PM.
Global markets showed subdued performance yesterday with few major drivers influencing financial assets in either direction. This is expected to change from today as Nvidia’s earnings report after market close has become an important macro event in recent quarters, rivaling reactions typically seen after surprise jobs reports or CPI releases.
European stocks started the session on a modestly firmer footing with Stoxx 600 up by 0.3%. As the morning progressed, slight divergence was observed with DAX 40 edging higher to session highs while FTSE 100 tilted lower by 0.1%. European sectors held a strong positive tilt with insurance leading post-earnings gains in Prudential (up by 2.7%). Basic resources were at the bottom of the pile due to broader weakness in underlying metal prices.
Markets are closely watching upcoming data releases including PCE inflation on Friday and the U.S. jobs report next week. Investors are also focused on how much the Federal Reserve will cut rates in September amidst inconclusive data that has left markets struggling for direction.
For instance, consumer confidence rose to a six-month high at 103.3 but labor market indicators fell to their weakest levels so far in this cycle supporting concerns about a slowdown in the labor market.
With investors maintaining moderate chances for a 50 basis point rate cut at upcoming meetings, futures are now pointing to a 33% probability of such a move in September up from 28% previously but still far from earlier pricing during peak market turmoil at the start of the month.
Front-end Treasuries rallied with yields coming down while long-end saw marginal selloff pushing yields higher but real yields continued their decline reaching lowest since January at 1.67%.
In Europe more pronounced bond selloffs were observed with yields rising across various tenors influenced partly by comments from ECB officials like Dutch central bank governor Knot hinting at waiting for full data before deciding on September rate move.
Equity markets are now focused on Nvidia’s earnings release which has driven significant market moves recently exemplified by S&P 500 surging post-February results marking second-best daily performance so far this year.
Ahead of this release main US indices saw little change with modest gains observed while Nvidia rose pulling Philadelphia Semiconductor Index higher but overall Mag7 saw slight decline driven by losses from Tesla and Amazon while small-cap stocks struggled with Russell 2000 down.
Overnight Asian markets showed mixed performance with several major indices losing ground led by Hang Seng marking worst performance in over three weeks amid disappointing corporate earnings while other indices like CSI300 Shanghai Comp KOSPI Nikkei also posted losses while US equity futures remained subdued.
Australia’s latest CPI data showed slight increase leading to marginal adjustments in rate cut expectations pushing government bond yields higher overnight.
Richmond Fed’s manufacturing index fell further indicating ongoing challenges while FHFA house price index also posted decline reflecting broader housing market trends.
Today’s agenda includes Nvidia’s earnings release Fed’s Bostic speech along with BoE’s Mann and data releases including Euro Area M3 money supply French consumer confidence providing additional insights into economic landscape ahead of key events later this week.
