Stock Futures Down Ahead of Nvidia’s Earnings, Fed Meeting Minutes
Pressure in Stock Index Futures
U.S. stock index futures faced pressure prior to chip designer Nvidia’s high-stakes earnings report. The report could impact the AI-led rally this year and investors also awaited minutes from the Federal Reserve’s latest policy meeting.
Nvidia Earnings Report
Nvidia experienced a 1.4% decline in premarket trading after a more than 4% drop in the prior session. The semiconductor firm was set to release its quarterly earnings after markets closed on Wednesday.
High Demand for Nvidia’s Chips
The company was expected to post a more than three-fold surge in its fourth-quarter revenue due to strong demand for its chips dominating the market for artificial intelligence (AI).
Analysts’ Warnings
Analysts cautioned that Nvidia’s high valuation could leave it vulnerable to significant declines if it fails to deliver exceptional results. This could also trigger a broader selloff among other technology firms that have benefited from AI bets.
The Impact of Nvidia Earnings
According to Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank, Nvidia’s earnings could have a substantial impact on the AI rally and the overall market. Many expect the AI bubble to burst at some point.
Stock Movement
Nvidia has surged 40.2% so far this year, in contrast to year-to-date gains of 6.7% and 4.1% in the Philadelphia Semiconductor Index and the tech-heavy Nasdaq.
Uncertainty in Wall Street
The AI-fueled rally hit a rough patch after data last week hinted at sticky inflation and raised concerns about potential delays in the Federal Reserve’s rate easing cycle.
Expectations from Fed’s Minutes
The minutes from the Fed’s January monetary policy meeting, due at 1400 ET (1900 GMT), would provide further insight into the potential timing of interest rate cuts.
Reactions of Investors
A majority of traders are currently pricing in June as the starting point for rate easing, compared with March at the start of the year, according to the CME Group’s (NASDAQ:) FedWatch tool.
Stock Movement in Pre-Market
At 7:00 a.m. ET, Dow e-minis were down 68 points, S&P 500 e-minis were down 11.25 points, and Nasdaq 100 e-minis were down 81.75 points.
Impact on Other Companies
Palo Alto Networks (NASDAQ:) slumped 23.0% in trading before the bell after the cybersecurity firm forecasted third-quarter billings below Wall Street estimates, signaling cautious spending by businesses.
Stock Movement of Other Companies
Shares of other cybersecurity companies such as Fortinet (NASDAQ:), Zscaler (NASDAQ:), and Crowdstrike Holdings fell between 6.1% and 9.3%.
Stock Movement of Amazon, Walgreens, and SolarEdge
Amazon.com (NASDAQ:) gained 1.2%, with the company set to join the Dow Jones Industrial Average effective next week, replacing Walgreens Boots Alliance (NASDAQ:). Shares of Walgreens slipped 2.9%. Renewable energy firm SolarEdge Technologies (NASDAQ:) dropped 15.9% after projecting first-quarter revenue below analysts’ estimates.
