US futures slide with Nvidia earnings in spotlight: Markets wrap

(Bloomberg) — Global stocks slipped on Tuesday ahead of Nvidia Corp.’s earnings and amid signs of sticky inflation dampening bets on early interest-rate cuts.

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Futures for the Nasdaq 100 and S&P 500 indexes retreated about 0.2%, while Europe’s Stoxx 600 gauge fell 0.3%, with energy shares among the biggest losers amid a drop in crude prices. Sentiment was also fueled by data showing UK inflation fell less than expected last month, raising questions about when the Bank of England will start cutting interest rates.

All eyes now turn to artificial intelligence bellwether Nvidia, which fell 0.6% in thin premarket New York trading. Wall Street estimates expect it to gain 243% on earnings, but its 90% year-to-date stock rally sets the bar high for further gains. Stocks hit new record highs this week ahead of results seen as the finale to a strong US earnings season.

“NVIDIA remains the focal point,” said Chris Weston, a strategist at Pepperstone Group Ltd., adding that options markets were pricing in 7% to 9% of the stock after the close.

While Nvidia’s sales and gross margins will get the initial attention, “it’s the revenue landscape and CEO Jensen Huang’s guidance on product launches that may dictate whether the market really wants to push this for a more sustained period,” Weston said. said.

Markets are jittery about the prospect of stubbornly high inflation, which could prevent central banks from easing policy as currently expected.

UK inflation figures lifted the pound and hammered bond prices across Europe as traders pushed back the expected timing of the first Bank of England rate cut. Earlier on Wednesday, the Reserve Bank of New Zealand kept interest rates unchanged and signaled policy would remain tight for longer, while Federal Reserve Governor Christopher Waller said on Tuesday he needed to see more good inflation numbers to initiate interest rate cuts.

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“Both RBNZ and UK inflation data highlight the fraught nature of the current period, with investors struggling to gauge both the timing and magnitude of long-awaited central bank easing cycles,” said Richard McGuire, head of rates strategy at Rabobank.

Inflation concerns have been revived by recent strength in metals and grain prices, with Bloomberg’s spot commodity index nearing a 16-month high. On Wednesday, gold, silver and copper fell from recent record highs.

Traders have dialed back expectations for Fed interest rate cuts this year, now seeing about 40 basis points of rate cuts in 2024, down from a 50 basis point cut last week. Minutes from the last central bank policy meeting, due later on Wednesday, may provide more clues about rate setters’ thinking.

Among individual stock movers, shares of Anglo American Plc were the weakest. Investors were waiting to see if rival BHP Group Ltd would launch its takeover bid to create a global copper behemoth. BHP has until 5pm London time to announce its firm intention to make an offer in what could be one of the world’s biggest takeover deals this year.

In New York premarket trading, Lululemon Athletica Inc. fell as much as 4%, while Tesla Inc. European sales fell to a 15-month low in April.

Highlights of this week:

  • US existing home sales, Wednesday

  • Feed Minutes, Wednesday

  • Nvidia earnings, Wednesday

  • Eurozone S&P Global Services and Manufacturing PMIs, Consumer Confidence, Thursday

  • G-7 Finance Meeting, May 23-25

  • US new home sales, initial jobless claims, Thursday

  • The central bank’s Raphael Bostick speaks Thursday

  • US Durable Goods, Consumer Sentiment, Friday

  • The central bank’s Christopher Waller speaks on Friday

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Some key movements in the markets:

Shares

  • S&P 500 futures were down 0.2% at 6:38 a.m. New York time

  • Nasdaq 100 futures fell 0.2%

  • Futures for the Dow Jones industrial average fell 0.1%

  • The Stoxx Europe 600 fell 0.3%

  • The MSCI world index fell 0.1%

Coins

  • The Bloomberg Dollar Spot Index was little changed

  • The euro fell 0.1% to $1.0841

  • The British pound was up 0.1% at $1.2727

  • The Japanese yen fell 0.2% to 156.43 per dollar

Cryptocurrencies

  • Bitcoin rose 0.6% to $70,108.23

  • Ether fell 0.2% to $3,738

Bonds

  • The yield on 10-year Treasuries rose three basis points to 4.44%

  • Germany’s 10-year yield rose three basis points to 2.53%

  • Britain’s 10-year yield improved nine basis points to 4.22%.

materials

  • West Texas Intermediate crude was down 0.5% at $78.27 a barrel.

  • Spot gold was down 0.2% at $2,415.64 an ounce

This story was produced with the help of Bloomberg Automation.

–With help from Winnie Hsu.

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