June 13, 2024
Stock Market

US futures slip as wait for Nvidia earnings nears its end

US stocks slipped away from record highs on Wednesday as investors waited for AI bellwether Nvidia’s (NVDA) pivotal earnings and for more clues to the Federal Reserve’s thinking on interest-rate cuts.

S&P 500 (ES=F) futures edged down roughly 0.1%, coming off a fresh record close. Dow Jones Industrial Average futures (YM=F) also shed 0.1%, while contracts on the tech-heavy Nasdaq 100 (NQ=F) hugged the flatline.

Stocks have managed to grind out new all-time highs this week as markets meandered in the wait to find out whether Nvidia will deliver on sky-high earnings expectations. Investors are bracing for a big move in the chipmaker’s share price and in other potential AI plays after the first-quarter results, set for release after the bell. It all adds up to a big test for the broader market as a whole.

Investors get a second reality check ahead, in minutes from the Fed’s last meeting. Eyes are on any deviation from policymakers’ repeated message that they want to be more confident of a cooldown in inflation before starting to cut rates. But some nerves were rattled ahead of the release later Wednesday by UK inflation data suggesting price pressures elsewhere are proving hard to dampen.

Read more: How does the labor market affect inflation?

At the same time, Target’s (TGT) quarterly results fed worries as to how the economy is holding up. The retail giant’s earnings fell short as consumers held off from nonessential purchases, citing inflation. Its shares slid 8% in pre-market trading.

Live2 updates

  • And we’re back on Nvidia

    It’s almost showtime for Nvidia (NVDA) with earnings out after the close today.

    It could be a wild 48 hours in markets because of this one stock.

    Current premiums in options markets imply that traders are bracing for an 8.6% swing in the stock price in either direction, reports the FT this morning.

    If Nvidia does react negatively to the results and guidance, it will be hard to shake the bull case on the stock most on the Street say.

    “Even if there is weakness from some unforeseen force in the near-term, we see limited stock weakness as investors want to keep or add to positions for second half Blackwell [new AI chip growth,” Piper Sandler semi analyst Harsh Kumar said in a note this morning.

    Game on.

    Yahoo Finance tech editor Dan Howley previews Nvidia’s results here.

  • Goldman keeps it real on government debt

    Goldman Sachs just served up a new piece of research that will likely be eaten up by politicians that love talking about the country’s ballooning debt.

    The bank’s economics team lifted its debt to GDP ratio to 130% by 2034, up from 97% in projections published in 2019.

    “The outlook for US fiscal sustainability has become more challenging over the last five years. The primary deficit—the deficit excluding interest costs on the debt—remains roughly 5% of GDP wider than it has been historically at full employment, the debt-to-GDP ratio has risen 19 percentage points to 98% and will likely soon surpass the post-WW2 high, and interest rates on new Treasury debt have roughly doubled. Higher expected future interest rates in particular have substantially worsened the trajectories of the debt-to-GDP ratio and of real interest expense as a share of GDP,” said Goldman Sachs chief economist Jan Hatzius.

    The unsavory chart below.

    Goldman Sachs sees a path higher for the country's already bloated debt position. Goldman Sachs sees a path higher for the country's already bloated debt position.

    Goldman Sachs sees a path higher for the country’s already bloated debt position. (Goldman Sachs)

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