Upbeat Nvidia Earnings Likely To Spark Early Rally On Wall Street
May 23 2024 - 9:10AM
IH Market News
The major U.S. index futures are currently pointing to a higher
open on Thursday, with tech stocks likely to lead an early rally
following upbeat quarterly results from Nvidia (NASDAQ:NVDA).
Shares of Nvidia (NASDAQ:NVDA) are soaring by 7.0 percent in
pre-market trading after the AI darling reported better than
expected fiscal first quarter results and provided upbeat
guidance.
Nvidia also announced a ten-for-one stock split of its common
stock and increased its quarterly cash dividend by 150 percent to
$0.10 per share.
However, concerns about the outlook for interest rates may
continue to hang over the broader markets following yesterday’s
slightly hawkish Fed minutes.
With the minutes signaling rates are likely to remain higher for
longer than previously expected, the chances rates will be lower by
September have fallen to 68.6 percent, according to CME Group’s
FedWatch Tool.
Potentially adding to the rate concerns, the Labor Department
released a report this morning showing first-time claims for U.S.
unemployment benefits fell by more than expected in the week ended
May 18th.
Stocks showed a lack of direction throughout much of the trading
session on Wednesday before coming under pressure following the
release of the minutes of the Federal Reserve’s latest monetary
policy meeting.
The major averages climbed off their worst levels going into the
close but ended the day in the red after ending Tuesday’s choppy
trading session modestly higher.
The Dow slid 201.95 points or 0.5 percent to 39,671.04, the
S&P 500 fell 14.40 points or 0.3 percent to 5,307.01 and the
Nasdaq dipped 31.08 points or 0.2 percent at 16,801.54.
The weakness that emerged on Wall Street came as the Fed minutes
suggested officials expect to maintain interest rates at current
levels longer than previously thought.
The minutes of the April 30-May 1 meeting said participants
highlighted disappointing readings on inflation over the first
quarter and indicators pointing to strong economic momentum.
The participants subsequently assessed that it would take longer
than previously anticipated for them to gain “greater confidence”
inflation is moving sustainably toward 2 percent.
With Fed officials repeatedly saying they need “greater
confidence” inflation is slowing before they cut rates, the minutes
said participants discussed maintaining the current restrictive
policy stance for longer.
While officials also discussed reducing policy restraint in the
event of an unexpected weakening in labor market conditions,
various participants also mentioned a willingness to raise rates
further should risks to inflation materialize in a way that such an
action became appropriate.
“The investing world will have to wait at least another month to
hear anything about rate cuts but the kicker in this report was the
willingness of some participants to restrict policy further which
apparently according to the markets action was quite the surprise,”
said Alex McGrath, Chief Investment Officer for NorthEnd Private
Wealth.
Selling pressure remained relatively subdued, however, as
traders seemed reluctant to make significant moves ahead of the
release of quarterly results from Nvidia.
Gold stocks moved sharply lower over the course of the session,
resulting in a 3.7 percent nosedive by the NYSE Arca Gold Bugs
Index. The sell-off by gold stocks came amid a steep drop by the
price of the precious metal.
A sharp decline by the price of crude oil also contributed to
significant weakness among oil service stocks, as reflected by the
3.4 percent plunge by the Philadelphia Oil Service Index.
Housing stocks also saw considerable weakness following the
release of a report unexpectedly showing a continued decrease by
existing home sales in August, with the Philadelphia Housing Sector
Index tumbled by 2.4 percent.
Brokerage, oil producer and steel stocks also showed notable
moves to the downside, while biotechnology and semiconductor stocks
bucked the downtrend.
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