Caution Ahead Of Nvidia Earnings May Weigh On Wall Street

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 (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 (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 (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 (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 (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.

Commodity, Currency Markets

Crude oil futures are slumping $0.74 to $77.92 a barrel after sliding $0.64 to $78.66 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,416.70, down $9.20 compared to the previous session’s close of $2,425.90. On Tuesday, gold fell $12.60.

On the currency front, the U.S. dollar is trading at 156.57 yen compared to the 156.17 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0831 compared to yesterday’s $1.0854.

Asia

Asian stocks ended mixed in range-bound trading on Wednesday, as investors waited for cues from AI chip leader Nvidia’s earnings and the release of minutes of the Federal Reserve’s latest meeting.

Waning optimism over the Chinese economic recovery and geopolitical uncertainties also kept investors on the sidelines.

The dollar consolidated as more Fed officials cautioned that sticky inflation could keep rates high for longer.

Gold edged down slightly in Asian trading, while oil prices fell over 1 percent after industry data pointed to swelling U.S. stockpiles.

China’s Shanghai Composite Index fluctuated before finishing marginally higher at 3,158.54. Hong Kong’s Hang Seng Index slipped 0.1 percent to 19,195.60.

Japanese markets fell notably as trade data disappointed. Japan logged a bigger-than-expected trade deficit in April, as exports grew less than expected due to weak demand in countries like China, data showed.

The Nikkei 225 Index dropped 0.9 percent to 38,617.10, while the broader Topix Index settled 0.8 percent lower at 2,737.36.

Chip-giants Tokyo Electron and Advantest fell around 1 percent, while tech investor SoftBank Group rallied 2.4 percent and air-conditioning maker Daikin Industries added 1.5 percent.

Seoul stocks ended on a flat note, with the Kospi finishing marginally lower at 2,723.46 ahead of the Fed minutes. Heavyweight Samsung Electronics fell 0.9 percent, while SK Hynix jumped 3 percent.

South Korean producer prices rose for the fifth consecutive month in April, partially driven by the soaring prices of services and industrial goods, central bank data showed earlier in the day.

Australian markets ended marginally lower after a choppy session. Miners and banks gained ground, offsetting losses among gold miners and energy stocks.

Across the Tasman, New Zealand’s benchmark S&P NZX-50 Index rose 0.5 percent to 11,732.28, as the Reserve Bank of New Zealand held its cash rate steady at 5.5 percent as expected but lifted its forecast peak for rates.

Europe

European stocks have declined on Wednesday due to uncertainty over the interest rate outlook and amid caution ahead of Nvidia’s earnings release.

Meanwhile, data showed that U.K. consumer price inflation slowed less than expected in April, raising uncertainty over a possible rate cut in June.

Data from the Office for National Statistics showed that the U.K. consumer price inflation weakened to the lowest since July 2021.

Consumer prices rose 2.3 percent on a yearly basis in April, slower than the 3.2 percent increase in March. However, inflation was stronger than economists’ forecast of 2.1 percent.

While the German DAX Index has dipped by 0.3 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index are both down by 0.7 percent.

In corporate news, Dutch engineer Aalberts has tumbled after organic revenues over the first four months of 2024 fell 2.5 percent year-on-year.

British industrial and electrical products provider RS Group has also slumped after underlying annual profits fell 25 percent.

Meanwhile, Marks & Spencer has soared. The retailer announced its first dividend since 2019 after reporting its highest profit in more than a decade.

Swedish paper group Billerud has also advanced after saying it has scrapped plans to convert the Escanaba paper mill to produce cartonboard.

British Land has also moved to the upside after selling its stake in Sheffield’s Meadowhall shopping centre for £360 million.

U.S. Economic Reports

Chicago Federal Reserve President Austan Goolsbee is due to deliver opening remarks before a hybrid Holding Company Symposium hosted by the Chicago Fed at 9:45 am ET.

At 10 am ET, the National Association of Realtors is scheduled to release its report on existing home sales in the month of April. Existing home sales are expected to rise to an annual rate of 4.21 million in April after tumbling to a rate of 4.19 million in March.

The Energy Information Administration is due to release its report on oil inventories in the week ended May 17th at 10:30 am ET. Crude oil inventories are expected to decrease by 3.1 million barrels after falling by 2.5 million barrels in the previous week.

At 1 pm ET, the Treasury Department is due to announce the results of this month’s auction of $16 billion worth of twenty-year bonds.

The Federal Reserve is scheduled to release the minutes of its April 30-May 1 monetary policy meeting at 2 pm ET.

Stocks In Focus

Shares of Target (TGT) are moving sharply lower in pre-market trading after the retail giant reported first quarter earnings that missed analyst estimates.

Telehealth company Hims & Hers Health (HIMS) is also seeing significant pre-market weakness after Citi downgraded its rating on the company’s stock to Neutral from Buy.

On the other hand, shares of Analog Devices (ADI) are likely to see initial strength after the semiconductor company reported fiscal second quarter results that beat expectations.

E-commerce company Shopify (SHOP) may also move to the upside after Goldman Sachs upgraded its rating on the company’s stock to Buy from Neutral.