Investing.com – Tech giant Nvidia’s earnings were in the spotlight Wednesday as investors looked to see whether the stock’s rising valuation was justified. Expected in April.
1. Nvidia’s financial report becomes the focus
The highlight of the day was a long-awaited earnings report from semiconductor leader Nvidia (NASDAQ: ) after the close on Wednesday, with the data widely seen as a barometer of the emerging artificial intelligence industry.
Investor enthusiasm for artificial intelligence has helped the technology index climb to near record highs, up more than 12% this year.
Nvidia’s earnings could affect the stock prices of AI-related companies such as Super Micro Computer (NASDAQ: ), Advanced Micro Devices (NASDAQ: ), arm Holdings (NASDAQ: ) and Palantir Technologies (NYSE: ) — but will also have a huge impact on the broader market, as it is now the third-largest U.S. company by market capitalization, behind Microsoft ( NASDAQ: ) and Apple (NASDAQ: ) .
Nvidia’s strong earnings could help justify rising stock market valuations in recent months.
“We expect NVIDIA’s results to improve in the April quarter, albeit not to January quarter levels, as supply improves and due to tighter comparisons,” analysts at Rosenblatt said in a May note. , the year-on-year growth rate is expected to slow down.
“We expect print to be choppy this week, but nonetheless have a positive bias toward a story that increasingly resonates with the best of worldly thinking in all of technology.”
2. Fed meeting minutes provide clues to interest rates
Reports from the Federal Open Market Committee’s latest meeting will be released later in the meeting and will be parsed for clues on the timing and extent of policy easing this year.
Last week’s lower-than-expected U.S. consumer price index (CPI) calmed concerns that the Fed would keep interest rates high for longer, but the announcement came after the Fed meeting represented by these minutes Posted later.
Fed officials continue to warn of inflationary risks, creating a degree of uncertainty over when, if at all, the central bank will begin cutting interest rates this year.
Federal Reserve governors said on Tuesday that recent economic data showed the central bank’s restrictive policies were working as intended, while the president of the Atlanta Fed said the central bank needed to be cautious before cutting interest rates for the first time, otherwise it would lead to pent-up spending and Leading to a “rebound” in inflation. “
3. Futures barely changed before the release of the Fed meeting minutes
U.S. stock futures were little changed on Wednesday amid caution ahead of minutes from the Federal Reserve’s last meeting and results from market favorite Nvidia Corp.
As of 04:05 ET (08:05 GMT), the contract was down 13 points, or 0.1%, down 2 points, or 0.1%, and up 6 points, or 0.1%.
Wall Street’s major indexes ended higher on Tuesday, closing at a new record.
In the enterprise sector, Nvidia’s data will be a highlight, with gains coming from things like Target (New York Stock Exchange:), analog devices corp. (NASDAQ: ), TJX (NYSE: ) and Raymond James (NYSE: ).
Elsewhere, shares of Urban Outfitters (NASDAQ: ) rose more than 6% after the clothing retailer beat revenue and profit estimates in its latest quarter, while the homebuilder toll brothers (NYSE: ) rose 1% after raising full-year delivery guidance.
4. UK inflation falls less than expected
British inflation fell less than expected in April, disappointing investors who were expecting the Bank of England to cut interest rates next month and suggesting that global inflationary pressures may be difficult to contain.
The National Bureau of Statistics said the annual growth rate was 2.3%, a sharp drop from March’s 3.2% growth and the lowest level since July 2021’s 2.0% growth. But it was still higher than the 2.1% forecast.
Services inflation – the Bank of England’s key measure of domestic price pressures – was much higher than expected, rising to 5.9% from 6.0% in March and above expectations of 5.5%.
Economists generally expect inflation to fall sharply, citing a 12% drop in regulated home energy tariffs that came into effect last month.
Following the release of April inflation data on Wednesday, the Bank of England will release a set of official labor market data and May inflation data before its next policy announcement on June 20.
The Fed is widely expected to cut interest rates this summer, but August rather than June is more likely to be the start of the rate-cutting cycle.
5. Crude oil falls after U.S. inventories rise
Crude oil prices fell on Wednesday, falling for a third straight session, on tight U.S. interest rates and an unexpected build in U.S. inventories.
Futures were down 1.2% at $77.74 a barrel as of 04:05 ET, while the contract was down 1.1% at $81.94 a barrel.
U.S. oil inventories unexpectedly rose by 2.5 million barrels last week, data showed on Tuesday, raising concerns among some about sluggish U.S. oil demand ahead of the upcoming Memorial Day holiday that marks the start of the traditional summer travel season.
Official inventory data will be released later in the meeting.
A series of cautious statements from Federal Reserve officials this week also weighed on market sentiment amid concerns that prolonged high U.S. interest rates will erode demand this year.
