Nvidia's Earnings Beat Expectations, But Market Impact Limited

Nvidia 'beats' as expected, but fallout limited

A look at the day ahead in U.S. and global markets from Mike Dolan After all that, Nvidia beat expectations - which has become "expected" - and the stock retreated about 5%. This is still August, after all. To be fair, the negative market reception to the artificial intelligence pacesetter's quarterly results overnight was typical of the reaction to other ostensible "beats" in the sector in this earnings season. These stocks are expensive, have come a long way in a short space of time and the bar to impress is now sky high. And while the hoopla around the $3.1 trillion-valued Nvidia's earnings this week reflects long-standing concerns about over-concentration of the market on the fortunes of a handful of companies, the wider disturbance has been limited. There were some clouds on the horizon of the megacap chip designer, but the main concern was simply that the "beat" wasn't as big as it has been recently. For all the reasonable concerns, this was far from a fatal blow to the AI theme. Spin out to other related readouts and the sky still looks pretty clear. Salesforce beat Wall Street expectations on revenue and profit too amid higher spending on its enterprise cloud products - sending its shares up 3% in extended trading. Super Micro Computer did tumble almost 20% on Wednesday - but that was after the AI server maker said it would delay the filing of its annual report a day after Hindenburg Research disclosed a short position in the company. And away from the Big Tech and AI world, the market value of billionaire Warren Buffett's Berkshire Hathaway surpassed $1 trillion for the first time with a modest 1% gain in its class B stocks. The upshot ahead of Thursday's bell? U.S. stock futures were steady to higher after the indexes ebbed marginally in the previous session. ATTENTION BACK ON MACRO WORLD Attention now switches back to the macro world, with the significant backdrop of a likely first Federal Reserve rate cut in the cycle next month. Even hawkish Atlanta Fed boss Raphael Bostic said overnight that it may be "time to move", even though he retained the right to see some more data before making up his mind. On that score the next ingredients come later today with another critical health check on the labor market and weekly jobless claims, with the Fed's favored PCE inflation gauge due out tomorrow. A punchy 100 basis points of Fed easing is still priced into the futures market by year-end - so perhaps there's some room to row that back, regardless of thinking on the first move in September. Despite a heavy week of Treasury debt sales, that Fed picture remains a balm for the bond market. Two-year yields recorded their lowest New York close in more than a year on Wednesday and remained subdued at 3.86% first thing today, and 10-year yields slipped back too. The global inflation picture still appears benign. Oil prices remain under wraps even against unsettling supply threats and continue to register year-on-year losses of up to 7%. U.S. retail gasoline prices are down more than 14% on this time last year, the deepest annual loss in 12 months. Inflation fell in six important German states in August due to lower energy prices, suggesting Germany's national inflation rate could decline noticeably this month. Economists polled by Reuters forecast a harmonised national inflation rate in Germany - the euro zone's largest economy - of 2.3% in August, down from 2.6% the previous month. But the readout from the states means than could now come in even lower. With markets already pricing a second interest rate cut this year from the European Central Bank even before the Fed meets next month, the euro fell back sharply on Thursday and lifted the dollar index more broadly. Just as important, money markets now see a 70% chance of third ECB cut in October. And in China, the offshore yuan surged to its strongest level in more than three weeks despite mainland stocks there ending in the red again. UBS on Wednesday cut its 2024 economic growth forecast for China to 4.6% from 4.9%, as it expects weaker property activity to have bigger than previously assumed drag on the overall economy. But in some sign of detente between the world's two biggest economic powers, U.S. National Security Adviser Jake Sullivan met Chinese President Xi Jinping in Beijing on Thursday and wrapped up three days of wide-ranging talks aimed at easing tensions between the two ahead of November's U.S. election. Key developments that should provide more direction to U.S. markets later on Thursday: * US Q2 GDP revision, weekly jobless claims, July trade balance, July wholesale/retail inventories, July pending home sales; Canada Q2 current account * Atlanta Fed President Raphael Bostic speaks * US corporate earnings: Best Buy, Dollar General, Ulta Beauty, Lululemon, Athletica, Autodesk, Campbell Soup, Brown-Forman, MongoDB * US Treasury sells $44 billion of 7-year notes, $85 billion of 4-week bills, $80 billion of 8-week bills (By Mike Dolan, editing by XXXX; mike.dolan@thomsonreuters.com)

Markets today: Stocks are 'dead quiet' before Nvidia's results

(Bloomberg) -- Stocks fluctuated in a tight range just a few hours ahead of results from Nvidia Corp. -- the last of the so-called Magnificent Seven megacaps to report. The chipmaker at the heart of the artificial-intelligence revolution will show whether it can once again shatter sales expectations. The bar is high for the company that boasts the best performance in the S&P 500 this year. Analysts, on average, are predicting Nvidia will project revenue growth of more than 70 per cent for the current quarter. And investors will be particularly keen to know how chief Jensen Huang sees demand developing into 2025. Because of its uncontested leadership in AI, Nvidia's market capitalization has ballooned to more than US$3 trillion. Given its massive influence on broader indexes, the reaction its results could drag the whole market up or down with it. Options trading implies a nearly 10 per cent move in either direction on the day following the results. "The entire universe waits for a 'certain' chip company to report earnings," said Dave Lutz at JonesTrading. "Markets are dead quiet as we await Nvidia tonight and PCE Friday." To Matt Maley at Miller Tabak, it's been a "pretty uneventful week" so far. While there's no guarantee that this will change, he says the odds are good that we'll see some significant movement one way or the other after Nvidia reports. "The activity should at least pick up," Maley said. The S&P 500 hovered near 5,620. Trading volume was 35 per cent below the average of the past month. Nvidia fell 1.2 per cent. Super Micro Computer Inc. sank over 20 per cent after saying it will delay filing its annual financial disclosures. Warren Buffett's Berkshire Hathaway Inc. topped $1 trillion for the first time. Treasury 10-year yields advanced one basis point to 3.83 per cent. While the hype nearly never lives up to reality, when it comes to being the most important stock in the market, investors may have a point regarding Nvidia, according to Bespoke Investment Group strategists. Throughout its history as a public company, the stock has averaged a one-day move of 8.1 per cent in reaction to earnings, they noted. Besides Meta Platforms Inc., the only other stocks that have experienced average one-day moves of more than five per cent in reaction to earnings were Tesla Inc. and Alphabet Inc. Of course, a big pick up in "activity" does not mean we'll definitely get a big pick up in "volatility," but it's a good bet that investors will not be sitting on their hands as much on Thursday as they have for much of this week, Maley noted. "If Nvidia doesn't give us some important answers, the odds are high that next week's employment data will provide us with what we want/need," the strategist said. "So, we seriously doubt that as we move into September, things will be as boring as they have been so far this week." Trading in stock options shows that investors are positioning for gains following the August wobble. The S&P 50s call skew, a measure of how much traders are willing to pay for bullish exposure, is steepening fast, suggesting some urgency in grabbing bullish options after Jerome Powell's dovish Jackson Hole speech, said Nomura's Charlie McElligott. The market keeps "trading like a beach ball you're trying to hold underwater," McElligott wrote in a note, pointing to demand for right-tail hedging that outweighs the remaining forced risk management from the volatility event in early August. That's why, despite some impulse selling at times, equity indexes "keep grinding back," he said. * Kohl's Corp. raised its full-year profit outlook as the retailer trims expenses and reduces inventory levels amid a pullback from consumers. * Abercrombie & Fitch Co. beat analysts' sales expectations for the sixth consecutive quarter, but it wasn't enough to impress investors who have grown accustomed to the '90s fashion comeback. * Foot Locker Inc.'s sales surpassed analysts' expectations as turnaround efforts and a rekindled relationship with key partner Nike Inc. begin to pay off, but investors remain unimpressed by the progress. * Nordstrom Inc. offered a rosier view for the current year's sales following better-than-expected results at its discount chain, the latest indication that shoppers are pivoting to off-price options as they hunt for deals. * Warren Buffett sold an additional $982 million of Bank of America Corp. stock as his conglomerate continues to shrink its investment in the second-largest U.S. bank. * Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday * Eurozone CPI, unemployment, Friday * U.S. personal income, spending, PCE; consumer sentiment, Friday * The yield on 10-year Treasuries advanced one basis point to 3.83% * Germany's 10-year yield declined three basis points to 2.26%

Morning Bid: Nvidia waiting game over, caution descends

In the end, the much-anticipated release of Nvidia's second quarter results on Wednesday is unlikely to push investors to either extreme, but Asian markets on Thursday may still open on the defensive. The AI golden goose and world's second-most valuable company reported second-quarter revenue of $30.04 billion, beating estimates of $28.70 billion, and forecast third-quarter revenue of $32.5 billion, compared with analysts' average estimate of $31.77 billion. But that doesn't appear to have sufficiently impressed investors who have gotten used to Nvidia's profits, revenue and forecasts smashing forecasts, not just beating them. Nvidia shares fell as much as 3.5% in volatile U.S. after-hours trading, which should weigh on tech stocks and equities more broadly at the open in Asia. Or perhaps when the dust settles a little, investors in Asia will look more favorably on what appears to be a pretty solid set of results? The backdrop to the trading day in Asia on Thursday was already challenging - Wall Street had closed lower before Nvidia's earnings on Wednesday, with the Nasdaq losing more than 1% and chip stocks down 1.8%, while the U.S. dollar and bond yields climbed higher. The dollar posted its biggest rise since early June, gaining more than 0.5% against a basket of major currencies and declining against emerging market currencies for a second day. The Asia/Pacific calendar on Thursday is extremely light, with only Japanese consumer confidence and capex data from New Zealand likely to pique investors' interest at all. Investor sentiment towards China remains bleak and Shanghai stocks closed lower on Wednesday for a third day, sliding to their lowest level in six and a half months. Swiss investment bank UBS on Wednesday cut its 2024 GDP growth forecast for China to 4.6% from 4.9%, citing a heavier-than-expected drag on overall economic activity from the property sector slump. More alarmingly, perhaps, it also cut its 2025 GDP growth forecast to 4% from 4.6% and next year's average inflation rate to 1.0% from 1.4%, indicating China's economic malaise is likely to deepen rather than lift in the coming year. Top Chinese and U.S. officials, meanwhile, discussed holding fresh talks between Presidents Joe Biden and Xi Jinping in the near future, the two countries said on Wednesday during high-level meetings in Beijing. The discussion occurred during lengthy talks between China's top diplomat, Wang Yi, and U.S. national security adviser Jake Sullivan held against the backdrop of sharp disagreements between the superpowers, including trade and tit-for-tat tariffs. Progress, or another false dawn? Here are key developments that could provide more direction to Asian markets on Thursday:

Nvidia's results, Apple, Harris interview - what's moving markets By Investing.com

Investing.com -- Wall Street is seen trading in tight ranges Thursday ahead of more labor macro data, a speech by Vice President Kamala Harris and, perhaps more importantly, the start of the Jackson Hole symposium on Friday. Nvidia (NASDAQ:NVDA) beat expectations with its quarterly earnings, but underwhelming guidance from the artificial intelligence darling resulted in a sharp selloff after hours. Nvidia reported adjusted earnings of $0.68 a share on revenue of $30.04 billion, beating estimates of $0.64 and $28.68 billion, for the three months ended July 28, as well as announcing a $50 billion stock buyback program. The stronger quarterly results were supported by a 154% surge in data center revenue to $26.27 billion from the same period a year earlier. However, the stock dropped almost 7% in after hours trading, losing $200 billion in market value after its revenue guidance for the current quarter - of around $32.5 billion - missed some estimates, as did its gross margin outlook. The forecasts also presented a slowing pace of growth from prior quarters. Nvidia also confirmed that it was facing some difficulties with its Blackwell line of advanced AI chips, although they were still set for launch by the fourth quarter. Surging demand for its AI chips have helped Nvidia crush consensus analyst estimates for several quarters, resulting in its market capitalization soaring above $3 trillion, briefly becoming the world's most valuable company in June. Nvidia shares have rallied more than 150% this year thanks to insatiable demand for generative artificial intelligence, and this hefty drop in its shares could turn out to be just another dip to buy this much-admired company. U.S. stock futures traded in a mixed fashion Thursday, with the tech-heavy Nasdaq underperforming after chipmaking giant Nvidia's results failed to live up to lofty expectations. By 04:05 ET (08:05 GMT), the Dow futures contract was 155 points, or 0.4%, higher, S&P 500 futures traded largely flat, while Nasdaq 100 futures fell by 30 points, or 0.2%. Nvidia's shares dropped around 7% premarket after the AI darling failed to impress investors despite exceeding expectations on the top and bottom lines [see above]. With the Nvidia watch party now over, attention will turn back to the strength of the U.S. economy and the likely impact on the Federal Reserve's monetary policy. Elsewhere, Salesforce (NYSE:CRM) and CrowdStrike (NASDAQ:CRWD) will be in the spotlight after both companies released their results after the close Wednesday. Apple (NASDAQ:AAPL) was seen ordering components for a much higher number of iPhones than last year, suggesting the technology giant is preparing for an artificial intelligence-driven boost to sales. Apple ordered components and parts for between 88 million to 90 million of its flagship device, Nikkei reported, compared to initial component orders of about 80 million iPhones. The firm is set to unveil the latest iteration of its flagship iPhone in early-September, the iPhone 16, and will also start rolling out a slew of artificial intelligence features in its devices. The increased orders reflect a slew of analyst forecasts that AI will help power a new round of growth in iPhone sales, which have been steadily declining over the past year. Kamala Harris, and her running mate Tim Walz, will sit for an interview with CNN later Thursday, in what will be her first interview since becoming the Democratic candidate in late July after President Joe Biden ended his campaign for re-election. While Harris has occasionally taken questions from journalists on foreign and economic policies on the campaign trail, she has yet to do a one-on-one media interview or hold a formal press conference. Harris laid out some broad policy agendas at the Democratic National Convention last week, promising a middle class tax cut at home and a muscular foreign policy of standing up to Russia and North Korea, but this interview could offer her the opportunity to put flesh to these bones.. U.S. Republican candidate Donald Trump and his Democratic rival Kamala Harris are also set to hold a presidential debate next month - the first chance some 240 million U.S. voters will get to hear Trump and Harris explain their policies side by side ahead of the Nov. 5 election. Crude prices steadied Thursday after two losing sessions, as traders digested the prospect of extended supply disruptions. By 04:05 ET, the U.S. crude futures (WTI) traded flat at $74.52 a barrel, while the Brent contract fell 0.1% to $77.52 a barrel. Crude markets were nursing two straight days of losses, reversing a recent rebound amid persistent concerns that slowing growth in the U.S. and China will dent demand in the coming months. Production disruptions in Libya, a member of the Organization of the Petroleum Exporting Countries, kept traders attaching some risk premium to crude, as did signs of a sustained conflict in the Middle East. Additionally, Ukraine's military said on Thursday it had attacked two oil storage facilities in Russia - the Atlas (NYSE:ATCO) oil depot in the southern Rostov region as well as the Zenit oil facility in Russia's Kirov region. These supply concerns overshadowed the news that U.S. oil inventories fell by less than expected in the week to August 23, with the Energy Information Administration reporting a drop of 0.85 million barrels. This ramped up concerns that U.S. oil demand will cool as the travel-heavy summer season comes to a close.