Will FOMC Meeting Minutes, Nvidia Earnings Wake Up Stock Markets?
Will FOMC Meeting Minutes, Nvidia Earnings Wake Up Stock Markets?
By:Ilya Spivak
Stock markets and the dollar are treading water after U.S. CPI data. Will FOMC meeting minutes and Nvidia earnings revive momentum?
Wall Street cheers U.S. CPI inflation data, but follow-through conspicuously absent.
May FOMC meeting minutes eyed as markets weigh officials’ sticky prices worries.
First-quarter Nvidia (NVDA) earnings report in focus to guide speculative interest.
An eerie quiet has settled across financial markets since last week’s one-day burst of optimism in the wake of April’s U.S. consumer price index (CPI) data.
Stock markets roared with approval as disinflation resumed, with the core measure of price growth sliding to a three-year low of 3.6% as expected.
The outcome seemed to underpin the case for the Federal Reserve to cut interest rates this year, allaying concerns that sticky prices might force the central back to scrap stimulus plans or even push it to resume rate hikes. Bonds rose alongside equities, gold and silver raced higher, and the U.S. dollar slumped against its major counterparts.
Stocks market stalls after cheering U.S. CPI data
Progress has been conspicuously absent since then. The bellwether S&P 500 stock index has been trading effectively flat since last week’s post-CPI daily close (May 15, 2024). It is up a meager 0.03%. The tech-oriented Nasdaq has done only marginally better, up 0.4%. Treasury bond yields are telling up across maturities over the same period, as is the U.S. dollar.
The standstill is echoed in the monetary policy outlook embedded into fed funds interest rate futures. The day before the CPI release, they settled on 36 basis points (bps) of easing priced in for 2024. That tally rose to 41 bps after inflation figures printed. It has now traded to 35bps, implying that next to nothing has changed.
From here, the spotlight turns to the incoming release of minutes from the May meeting of the Federal Reserve's policy-setting Federal Open Market Committee (FOMC). The statement unveiled after the conclave signaled officials’ frustration with stalling disinflation and a determination to withhold rate cuts until adequate progress is resumed.
Will FOMC meeting minutes, NVDA earnings wake up the markets?
Traders may be keen to weigh up the tone of the discussion around what to do about sticky prices, and whether the idea of resuming rate hikes has gained any traction. Speaking at the press conference following the meeting, Fed Chair Jerome Powell said current policy settings will become restrictive enough to cool prices if held over a longer period.
A closely watched earnings report from Nvidia (NVDA) – a darling of speculative enthusiasm centered on the burgeoning artificial intelligence (AI) space – is also on the menu. The company is expected to show EPS of $5.60 on revenue of $24.6 billion in the first quarter.
The magnitude of quarterly upside surprises that the chipmaker has reported on both measures has been nothing short of staggering. Last year, it beat quarterly EPS forecasts by an average of 26.5%. The pace has been slowing in the past two quarters, however. A risk-off response is feasible if momentum continues to cool.
Ilya Spivak, tastylive head of global macro, has 15 years of experience in trading strategy, and he specializes in identifying thematic moves in currencies, commodities, interest rates and equities. He hosts Macro Money and co-hosts Overtime, Monday-Thursday. @Ilyaspivak
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