Wall Street Cautiously Awaits Nvidia's Earnings Report Amid Fed Skepticism
Investor sentiment dampened by Fed's cautionary stance on Wall Street
Investors are eagerly anticipating Nvidia's earnings report for the first quarter of fiscal 2026, due out after market close, as the outlook on AI development serves as a respite from trade issues. However, the Federal Reserve's renewed concern about higher inflation is pushing stocks into the red.
After a strong gain the previous day, Wall Street opened slightly lower midweek. Investors are holding off on new purchases, waiting for Nvidia's earnings report and outlook. Traders caution of "disappointment potential" for the semiconductor AI leader, and the question remains how export restrictions and tariffs will affect long-term forecasts. There was also some headwind from the Fed and the bond market, where yields were ticking up again. The Dow Jones Index fell 0.6% to 42,099 points, while the S&P 500 and Nasdaq Composite decreased 0.6% and 0.5%, respectively. Preliminary data showed 702 (previously 2411) advancers and 2080 (previously 380) decliners on the NYSE, with 44 (previously 35) stocks unchanged.
James Demmert, chief strategist at Main Street Research, explains the significance of Nvidia's earnings report, stating, "It's not just about Nvidia, but the entire stock market, as it could reignite investor optimism and help investors focus on the power of AI rather than Washington's headlines about tariffs and taxes." Nvidia's stock was extremely volatile, down 0.5% following the earnings report.
The Fed's meeting minutes, released in the evening, caused stock prices to drop to their daily lows. Concerns about potential inflation due to President Donald Trump's trade policies were expressed by Fed representatives. Another event keeping investors busy was an auction of five-year U.S. Treasury notes, with solid demand pushing secondary market yields off their daily highs. The yield on ten-year U.S. Treasury notes rose 5 basis points to 4.48%, just shy of the 4.5% level that had previously caused jitters.
The dollar's recovery from the previous day continued, boosted by rising market yields, with the Dollar Index gaining 0.4%. Despite this, ING analyst Francesco Pesole expects the greenback's recovery to be limited, as concerns about slowing U.S. economic growth and the U.S. budget deficit persist.
Oil prices rose by up to 0.8 percent, affected by the possibility of further sanctions against Russia. The aggressor in the Ukraine war showed no genuine willingness for a ceasefire, leading to signs that US President Donald Trump might also lose patience and impose new sanctions, particularly against the oil sector. However, prices retreated significantly from their daily highs as the Opec+ cartel group was expected to decide on an increase in production on Saturday.
The gold price barely inched into the red, with rising US market interest rates and a strong dollar leading to a gradual downward trend.
General Motors shares fell 1.9 percent, as the US automaker has scrapped a significant investment in electric motor production and plans to invest multiples of that amount in the manufacture of the latest V8 engines. Salesforce (-0.3%) is acquiring cloud platform Informatica for $8 billion, while Stellantis shares fell by 3.1 percent, with Antonio Filosa set to take up the CEO post on June 23.
Chevron (-1.3%) was granted a license to maintain its oil production in Venezuela, enabling the company to maintain important infrastructure in the South American country, but preventing it from importing oil from Venezuela. Gamestop (-10.9%) plummeted after the video game retailer's initial positive reception of its Bitcoin purchase, spooking investors in department store chain Macy's, which fell by 0.5 percent. Abercrombie & Fitch jumped 14.7 percent, reporting earnings above market expectations, while Vail Resorts gained 8.8 percent as former CEO Rob Katz returns to operate ski resorts.
For more on today's market activity, please see here.
Sources: ntv.de, mau/DJ
Wall Street
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Nvidia
The Commission has also been consulted on Nvidia's draft financial plan, considering the potential impact on investing in the business sector.
In light of the cautious Wall Street response to Nvidia's earnings report, the company might need to reassure investors about future financial commitments to AI investing.
