Caution Ahead Of Nvidia Earnings May Weigh On Wall Street
May 22 2024 - 9:09AM
IH Market News
The major U.S. index futures are currently pointing to a
slightly lower open on Wednesday, with stocks likely to give back
ground after ending yesterday’s choppy trading day modestly
higher.
Traders may look to cash in on recent strength in the markets
ahead of the release of quarterly results from AI darling Nvidia
(NASDAQ:NVDA).
Nvidia is scheduled to release its fiscal first quarter results
after the close of today’s trading, with analysts expecting the
company to report substantial earnings and revenue growth.
Nonetheless, traders may be reluctant to make significant moves
ahead of the release of the minutes of the Federal Reserve’s latest
monetary policy meeting this afternoon.
The minutes could have an impact on the outlook for interest
rates following recent comments from some Fed officials suggesting
rates may need to remain higher for longer than anticipated.
While the likelihood rates will be lower by September remains
high, the chances have fallen to 67.0 percent from close to 90
percent last week, according to CME Group’s FedWatch Tool.
Following the mixed performance seen in Monday’s session, stocks
showed a lack of direction throughout much of the trading day on
Tuesday. Despite the choppy trading on the day, the S&P 500 and
the Nasdaq reached new record closing highs.
The major averages spent the day bouncing back and forth across
the unchanged but moved to the upside going into the close. The
S&P 500 climbed 13.28 points or 0.3 percent to 5,321.41, the
Nasdaq rose 37.75 points or 0.2 percent to 16,832.62 and the Dow
edged up 66.22 points or 0.2 percent to 39,872.99.
The lackluster performance on Wall Street came as traders took a
step back to assess the recent strength in the markets.
Renewed confidence the Federal Reserve will lower interest rates
in the coming months has contributed to the advance, but recent
comments from Fed officials have once again created some
uncertainty.
Another quiet day on the U.S. economic front may also have kept
some traders on the sidelines ahead of the release of the minutes
of the Fed’s latest monetary policy meeting on Wednesday.
Among individual stocks, shares of Peloton Interactive
(NASDAQ:PTON) moved sharply lower after the exercise equipment and
media company announced a global refinancing that includes an
offering of $275.0 million worth of convertible senior notes due
2029.
Auto parts retailer AutoZone (NYSE:AZO) has showed a notable
move to the downside after report better than expected fiscal third
quarter earnings but weaker than expected revenues.
On the other hand, shares of XPeng (NYSE:XPEV) surged after the
Chinese electric vehicle maker reported fiscal first quarter
results that beat analyst estimates on both the top and bottom
lines.
Reflecting the lackluster performance by the broader markets,
most of the major sectors ended the day showing only modest
moves.
Airline stocks showed a significant move to the downside,
however, with the NYSE Arca Airline Index falling by 1.8
percent.
Notable weakness was also visible among networking stocks, as
reflected by the 1.2 percent loss posted by the NYSE Arca
Networking Index.
The index pulled back off its best closing level in over three
months amid a steep drop by Palo Alto Networks (NASDAQ:PANW), which
came under pressure after the cybersecurity company forecast fiscal
fourth quarter revenues and billings toward the low end of analyst
estimates.
On the other hand, tobacco and banking stocks saw some strength
on the day, driving the NYSE Arca Tobacco Index and the KBW Bank
Index up by 1.3 percent and 1.1 percent, respectively.
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