Upbeat Nvidia Earnings Likely To Spark Early Rally On Wall Street

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 (NVDA).

Shares of Nvidia (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.

Commodity, Currency Markets

Crude oil futures are climbing $0.71 to $78.28 a barrel after tumbling $1.09 to $77.57 a barrel on Wednesday. Meanwhile, after plunging $33 to $2,392.90 an ounce in the previous session, gold futures are slumping $22.70 to $2,370.20 an ounce.

On the currency front, the U.S. dollar is trading at 156.70 yen versus the 156.80 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0847 compared to yesterday’s $1.0823.

Asia

Asian stocks ended Thursday’s session mixed as rate worries lingered and China announced immediate military drills around Taiwan, marking a concerning escalation in the tensions between Taiwan and China, which has long claimed sovereignty over the island.

Hawkish minutes from the Federal Reserve’s last policy meeting boosted the dollar, which hovered near a one-week high following its best day this month against major peers.

Gold pulled back further from record highs after the Fed meeting minutes revealed discussions of a further tightening of interest rates if inflation remained sticky.

Oil prices declined for a fourth straight session on bearish inventory data and persistent concerns over higher for longer U.S. interest rates.

China’s Shanghai Composite Index slumped 1.3 percent to 3,116.39, while Hong Kong’s Hang Seng Index tumbled 1.7 percent to 18,868.71.

Japanese markets rallied as strong financial results from U.S. tech giant Nvidia boosted technology stocks. The Nikkei 225 Index jumped 1.3 percent to 39,103.22, marking an over one-month closing high. The broader Topix Index settled 0.6 percent higher at 2,754.75.

Advantest surged 5.4 percent, SoftBank Corp. jumped 4.3 percent and Tokyo Electron added 1.8 percent.

Seoul stocks recovered from an early slide to end on a flat note. The Kospi finished marginally lower at 2,721.81 as the Bank of Korea held its key policy rate steady amid sticky inflation and raised its 2024 GDP growth forecast.

Australian markets closed lower as rate worries led investors to book profits in commodity-related stocks. Information technology stocks outperformed, with Xero surging 8.7 percent after the accounting software giant reported better than expected FY24 profits.

The benchmark S&P ASX 200 Index dropped 0.5 percent to 7,811.80, while the broader All Ordinaries Index ended down 0.4 percent at 8,083.10.

Across the Tasman, New Zealand’s benchmark S&P NZX-50 Index climbed 0.7 percent to 11,809.48 after retail sales data for the first quarter beat estimates.

Europe

European stocks are mostly higher on Thursday after British Prime Minister Rishi Sunak called a general election for July 4 and a survey showed business activity in the euro zone accelerated in May.

The HCOB Flash Eurozone purchasing managers’ index (PMI) published by S&P Global improved to 52.3 from 51.7 in April. That was the highest reading in 12 months.

While the U.K.’s FTSE 100 Index is just above the unchanged line, the German DAX Index is up by 0.4 percent and the French CAC 40 Index is up by 0.5 percent.

Nvidia’s shares jumped in Frankfurt after record sales of artificial intelligence chips sent the company’s revenue soaring 262 percent in the past quarter.

German ticketing firm CTS Eventim has also shown a substantial move to the upside after its first quarter EBITDA beat forecasts.

Gerresheimer has also surged. The packaging and medical equipment maker Gerresheimer has signed a purchase agreement for acquiring Blitz LuxCo Sarl.

Merck KGaA, a leading science and technology company, was marginally higher after it agreed to a $600m deal to buy life science company Mirus Bio.

Shares of Wizz Air Holdings have also soared after the low-cost airline returned to a profit in fiscal year 2024.

Hargreaves Lansdown has also spiked after the investment platform rejected a surprise takeover offer from a group of private equity buyers.

Meanwhile, Embracer shares have plummeted. The Swedish-based gaming conglomerate said its CFO and deputy CEO Johan Ekström would step down after five years for personal reasons.

National Grid shares have also plunged in London after the electricity and gas utility unveiled plans to raise about 7 billion pounds ($8.9 billion) through a fully underwritten rights issue of 1.09 billion new shares.

Norwegian telecoms company Telenor ASA has declined on news that Sigve Brekke will be stepping down as President & CEO of the company on December 1.

U.S. Economic Reports

A report released by the Labor Department on Thursday showed first-time claims for U.S. unemployment benefits fell by more than expected in the week ended May 18th.

The Labor Department said initial jobless claims slid to 215,000, a decrease of 8,000 from the previous week’s revised level of 223,000.

Economists had expected jobless claims to edge down to 220,000 from the 222,000 originally reported for the previous week.

Meanwhile, the report said the less volatile four-week moving average crept up to 219,750, an increase of 1,750 from the previous week’s revised average of 218,000.

At 10 am ET, the Commerce Department is due to release its report on new home sales in the month of April. Economists expect new home sales to pull back by 1.9 percent to an annual rate of 680,000 in April after soaring by 8.8 percent to a rate of 693,000 in March.

The Treasury Department is scheduled to announce the details of this month’s auctions of two-year, five-year and seven-year notes at 1 pm ET.

At 3 pm ET, Atlanta Federal Reserve President Raphael Bostic is due to participate in a virtual question-and-answer session with students in MBA macroeconomic class at the Stanford Graduate School of Business.

Stocks In Focus

Shares of Snowflake (SNOW) are seeing significant pre-market strength after the cloud computing company reported better than expected fiscal first quarter revenues and provided upbeat guidance.

Chemical giant DuPont (DD) is also moving sharply higher in pre-market trading after announcing plans to separate into three distinct, publicly traded companies.

On the other hand, shares of VF Corp. (VFC) are likely to see initial weakness after the apparel and footwear company founded reported an unexpected fiscal fourth quarter loss on weaker than expected revenues.

Concert giant Live Nation (LYV) may also come under pressure after a report from Bloomberg said the Justice Department may file an antitrust complaint against the company as soon as next month.