After a powerful rally on Tuesday, markets are churning ahead of key news on the earnings and interest rate front. Equities, Treasuries, gold, and silver are all trading around the flatline. Crude oil and the dollar were recently up modestly.
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Wednesday is “Waiting Day” – waiting for Nvidia Corp. ( NVDA ) earnings after the bell and the latest Federal Reserve meeting minutes before it. The benchmark chip-making behemoth is reporting fiscal first-quarter results...and investors are eagerly awaiting the data.
Forecasts call for adjusted earnings per share of 88 cents, up from 61 cents in the year-ago period. Revenue is expected to rise 66% to $43.3 billion. Nvidia announced already that it would have to take a $5.5 billion charge because the Trump Administration banned sales of the firm’s H20 chip to China. NVDA shares have traded in a large sideways range for the past year.
As for the Fed, minutes from the May 6-7 policy meeting could shed light on how long officials are content to play “wait-and-see” when it comes to cutting interest rates. We’ve seen a mix of weaker “soft” economic data and solid “hard” numbers – with sentiment fading but hiring solid. Inflation has come off the boil, but not enough to inspire an imminent rate cut.
The federal funds rate target is 4.25%-4.5% currently, with the next three policy meetings set to conclude on June 18, July 30, and September 17. Rate futures markets are pricing in virtually no chance of a June cut, and only a 1-in-4 chance of a 25-basis point move in July. But the odds of a cut in September are hovering just under 50%.
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On the retail front, a trio of leading chains reported their latest results. Macy’s Inc. ( M ) showed signs of stabilizing, with a new strategy of focusing on top-performing locations paying off with better-than-expected sales. Teenager and young-adult clothing company Abercrombie & Fitch Co. ( ANF ) topped sales targets, too, while Dick’s Sporting Goods Inc. ( DKS ) reiterated its guidance. The sporting goods chain is in the process of acquiring Foot Locker Inc. ( FL ) for $2.4 billion.
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