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Anxiety Ahead Of Fed Minutes, Nvidia Earnings May Weigh On Wall Street
US Market
The major U.S. index futures are currently pointing to a lower open on Wednesday, with stocks likely to add to the losses posted in the two previous session.
The downward momentum on Wall Street reflects lingering concerns about the outlook for interest rates ahead of the release of the minutes of the latest Federal Reserve meeting later in the day.
“The Fed kept rates unchanged for the fourth time in a row at the January meeting and indicated it was not ready to start cutting,” said Danni Hewson, head of financial analysis at AJ Bell.
She added, “The meeting minutes should lift the lid on this thinking and more likely spell out that inflation needs to come down further before the central bank reaches for the scissors.”
Traders are also on edge ahead of the release of fourth quarter results from Nvidia (NVDA) after the close of today’s trading.
Shares of Nvidia have skyrocketed this year amid optimism about demand for its AI chips, but traders are wary of whether its results will support further upside.
“While equities have run out of steam in recent days, Nvidia’s results could be make or break time for markets,” said Hewson. “Elevated expectations mean the chip specialist has no room for error. It needs to smash it out of the park and show that the AI boom still has momentum.”
Ahead of the release of its quarterly results, Nvidia is slumping by 2.1 percent in pre-market trading after tumbling by 4.4 percent on Tuesday.
Stocks moved mostly lower during trading on Tuesday, extending the pullback seen during last Friday’s session. The Nasdaq showed a notable move to the downside amid weakness among tech stocks.
The major averages ended the day in negative territory but off their lows of the session. The Nasdaq slumped 144.87 points or 0.9 percent to 15,630.78, the S&P 500 fell 30.06 points or 0.6 percent to 4,975.51 and the Dow dipped 64.19 points or 0.2 percent to 38,563.80.
The weakness on Wall Street partly reflected ongoing anxiety about the outlook for interest rates following last week’s hotter-than-expectation inflation data.
CME Group’s FedWatch Tool is indicating just an 8.5 percent chance the Federal Reserve will lower rates by a quarter point in March, while the chances of a quarter point rate cut in early May have fallen to 33.8 percent.
The Fed may provide additional insight into the outlook for interest rates with the release of the minutes of its latest monetary policy meeting on Wednesday.
Meanwhile, a strong gain by Walmart (WMT) helped limit the downside for the Dow, with the retail giant surging by 3.2 percent after reporting fourth quarter results that exceeded estimates and announcing a deal to acquire TV maker Vizio (VZIO) for $2.3 billion.
Steel stocks showed a significant move to the downside, with the NYSE Arca Steel Index tumbling by 1.9 percent after ending last Friday’s trading at its best closing level in well over a month.
Significant weakness was also visible among semiconductor stocks, as reflected by the 1.6 percent loss posted by the Philadelphia Semiconductor Index.
Tobacco, oil producer and transportation stocks also saw notable weakness, moving lower along with most of the other major sectors.
U.S. Economic Reports
Federal Reserve Board Governor Michelle Bowman is due to participate in a discussion, “A View from the Federal Reserve,” before an Exchequer Club luncheon at 1 pm ET.
Also at 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $16 billion worth of twenty-year bonds.
The Federal Reserve is slated to release the minutes of its January 30-31 monetary policy meeting at 2 pm ET.
Stocks in Focus
Shares of Palto Alto Networks (PANW) are plummeting in pre-market trading after the cybersecurity company reported better than expected fiscal second quarter results but lowered its forecast for full-year revenue growth.
Online healthcare company Teledoc (TDOC) is also seeing substantial pre-market weakness after reporting fourth quarter revenue that missed analyst estimates and providing disappointing guidance.
Shares of SolarEdge Technologies (SEDG) are also likely to see an initial sell-off after the solar inverter maker reported mixed fourth quarter results and forecast first quarter revenue below expectations.
Meanwhile, shares of Toll Brothers (TOL) are likely to move to the upside after the homebuilder reported fiscal first quarter results that exceeded analyst estimates on both the top and bottom lines.
Europe
European stocks are mixed on Wednesday as investors await cues from flash eurozone consumer confidence data for February as well as the FOMC meeting minutes due later in the day.
While the U.K.’s FTSE 100 Index has slid by 0.8 percent, the French CAC 40 Index is up by 0.1 percent and the German DAX Index is up by 0.3 percent.
Coffee group JDE Peet has moved notably lower after it forecast organic sales growth at the low end of its mid-term target.
British lender HSBC Holdings has also plummeted as it reported a plunge in fourth-quarter profit after a charge on Chinese bank stake.
Mining giant Rio Tinto has also moved to the downside after reporting a dip in profits over the year, as expected. Glencore has also slumped after posting a steep drop in annual profit.
On the other hand, British bank Barclays has shown a strong move to the upside on share buyback news.
Fresenius SE shares have also rallied. The German health care company reported a net loss for the fourth quarter, mainly due to results from the valuation effect of Fresenius Medical Care to the tune of 521 million euros. Revenue remained almost unchanged from the previous year.
Asia
Asian stocks ended mixed on Wednesday, with mainland Chinese and Hong Kong markets rallying after authorities announced more steps to revive investor confidence.
Markets elsewhere across Asia ended on a subdued note ahead of chipmaker Nvidia’s quarterly earnings and the FOMC meeting minutes release.
The U.S. dollar tracked global yields lower, while gold hit a fresh one-week peak to extend gains for a fifth consecutive session.
Oil edged up slightly in Asian trading as investors awaited key PMI data and U.S. inventory reports for hints on the outlook for demand.
China’s Shanghai Composite Index jumped 1.0 percent to 2,950.96 after a fresh crackdown on trading by quant funds and amid signs of more targeted support for the country’s property sector. Hong Kong’s Hang Seng Index surged 1.6 percent to 16,503.10, driven by gains in the tech sector.
Japanese shares edged lower for a second consecutive session as tech shares sagged ahead of Nvidia’s earnings release. Investors ignored data showing that Japanese exports grew much more than expected in January.
The Nikkei 225 Index slipped 0.3 percent to 38,262.16, while the broader Topix Index settled 0.2 percent lower at 2,627.30. Tech investor SoftBank Group fell nearly 2 percent.
Seoul stocks ended lower ahead of the FOMC meeting minutes release. The Kospi eased 0.2 percent to 2,653.31. Samsung Life Insurance surged 8.1 percent on expectations of an increase in shareholder value.
Australian markets fell notably, with miners suffering heavy losses as concerns around China’s economic recovery pushed iron ore prices to a three-month low.
The benchmark S&P/ASX 200 Index dropped 0.7 percent to 7,608.40, while the broader All Ordinaries Index closed 0.7 percent lower at 7,860. Heavyweights BHP and Rio Tinto fell 2.4 percent and 1.8 percent, respectively.
Figures from the Australian Bureau of Statistics showed earlier in the day that Australian wages grew at the fastest annual pace in 15 years in the fourth quarter.
Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index rose 0.2 percent to 11,590.47.
Commodities
Crude oil futures are slipping $0.18 to $76.86 a barrel after tumbling $1.42 to $77.04 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,039.50, down $0.30 compared to the previous session’s close of $2,039.80. On Tuesday, gold climbed $15.70.
On the currency front, the U.S. dollar is trading at 150.04 yen compared to the 150.01 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0807 compared to yesterday’s $1.0808.
