Wall Street Braces For Subdued Start Ahead Of Nvidia Earnings, Fed Minutes: Analyst Cautions About Guarding Against 'Over-Exuberance'

Zinger Key Points
  • The market will likely move sideways until we hear the results and outlook from Nvidia, says an analyst.
  • Strong gains in May have helped major indices touch record highs in May and near-term trajectory will boil down to how inflation pans out.

Index futures are trading uniformly lower early Wednesday after the market’s resilient upward move in the previous session. The sentiment is likely to remain guarded ahead of Nvidia Corp.’s NVDA quarterly report due after the market opens. Traders may also pore over the May Federal Open Market Committee meeting minutes to glean cues that can clarify the near-term rate trajectory.

FuturesPerformance (+/-)
Nasdaq 100+0.01%
S&P 500-0.07%

In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust SPY fell 0.11% to $530.80, while the Invesco QQQ ETF QQQ traded up 0.01% at $455.86 according to Benzinga Pro data.

Cues From Last Session

The major averages closed modestly higher on Tuesday, as traders pondered over the Fed speeches and showed caution ahead of Nvidia’s earnings. The indices opened lower but made good their losses in early trading and spent the better part of the session above the unchanged line.

The Nasdaq Composite and the S&P 500 Index ended at fresh closing records, while the Dow Jones Industrial Average closed just shy of its record under the 40,000 mark. Most sectors saw either muted gains or were flattish, while energy and industrials ended firmly in the red.

IndexPerformance (+/-)Value
Nasdaq Composite+0.22%16,832.62
S&P 500 Index+0.25% 5,321.41
Dow Industrials+0.17%39,872.99
Russell 2000-0.20%2,098.36

Insights From Analysts:

Nvidia’s earnings will put a bookend on the earnings season, and the market will likely move sideways until we hear the results and outlook, said fund manager Louis Navellier. “The option market is priced for an 8% swing in both directions, down from the last 4 quarters’ average of a 13% swing, a positive sign.,” he said.

Amid the buoyancy, Comerica Chief Investment Officer John Lynch sounded a note of caution. “While the fresh records for equity indexes suggest a positive commentary on risk appetite, the reemergence of ‘meme stocks’ requires us to be on guard against over-exuberance,” he said.

“Extraordinary monetary and fiscal policy stimulus has been a tailwind for asset prices, but at some point, earnings must substantiate these price levels.”

Upcoming Economic Data:

  • The National Association of Realtors will release the existing home sales report for April at 10 a.m. EDT. Economists, on average, expect existing home sales to come in at a seasonally adjusted annual rate of 4.21 million units, slightly up from 4.19 million units in March.
  • The Energy Information Administration will release its weekly petroleum status report at 10:30 a.m. EDT.
  • The Treasury will auction 20-year bonds at 1 p.m. EDT.
  • The Fed will release the minutes of June 30-May 1 FOMC meeting at 2 p.m. EDT. At the meeting, the Fed announced a pause decision but the post-meeting policy statement and Chair Jerome Powell’s comments at the press conference bordered along dovishness and perked up rate-cut hopes.

See Also: Best Futures Brokers

Stocks In Focus:

  • Viasat, Inc. VSAT fell about 11% in premarket trading following its quarterly results announcement while Urban Outfitters, Inc. URBN gained about 6.50% on earnings.
  • Analog Devices, Inc. ADI, PDD Holdings Inc. PDD, TJX Companies, Inc. TJX, Williams-Sonoma, Inc. WSM, Target Corporation TGT and Vipshop Holdings Limited VIPS are among the other notable companies reporting before the market opens.
  • Those reporting after the close include Nvidia, Snowflake Inc. SNOW, Synopsys, Inc. SNPS, V.F. Corporation VFC and Zuora, Inc. ZUO.

Commodities, Bonds, and Global Equity Markets:

Crude oil futures were weaker yet again and gold futures also pulled back. The U.S. 10-year note yield fell 2.9 basis points to 4.443% and Bitcoin BTC/USD traded just above the $70,000 level.

The major Asian markets ended mixed amid caution, with Japan retreating on weak domestic data. While some of the other markets in the region witnessed modest losses, the Chinese market ended marginally higher. The New Zealand, Indonesian, Indian and Taiwanese markets gained some ground. The Reserve Bank of New Zealand kept its official cash rate unchanged but hinted sticky inflation could keep rates steady for longer.

European stocks also started on a lackluster note.

Read Next: 3 Stocks To Watch As Copper Surges To Record Highs: ‘Something Is Cooking In China’

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Posted In: EarningsEquitiesNewsFuturesPreviewsTop StoriesEconomicsFederal ReservePre-Market OutlookMarketsMoversTrading IdeasJerome PowellJohn LynchLouis Navellier.Stories That MatterUS market preview
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