Markets Hanging by a Thread with Nvidia and Fed Minutes Today

The Expectations on Nvidia’s Quarterly Results and Fed’s Minutes

The markets today are focused on two highly anticipated events: Nvidia, the AI queen’s quarterly results, and the release of the Fed’s minutes.

Investors are worried about the volatile stock markets in uncertain scenarios.
They hope that the AI giant Nvidia can meet the high expectations, while also keeping a cautious eye on the US interest rate outlook.

In this atmosphere of anticipation, Chinese stocks are closing the session higher.
On the other hand, the Japanese Nikkei fell by 0.8% as data showed that a weak yen was boosting exports but also fueling imported inflation, weighing on business confidence.

European stocks are set to open higher.
In the UK, April’s inflation stood at 2.3% on an annual basis, exceeding the 2.1% forecast but closer to the Bank of England’s 2% target compared to March’s 3.2%.
The possibility of a rate cut is looming.

All Eyes on Nvidia: What Do Markets Expect?

The markets are gearing up for Nvidia’s earnings release at the end of today’s trading session.
Options are priced for an 8.7% swing in either direction for the $200 billion market cap company.

Analysts wonder how much more Nvidia can deliver, given its 77% profit margin and a 93% increase in stock value compared to last year.

“Sentiment is quite positive, with our values well above consensus and a feeling that the management has something up its sleeve to pleasantly surprise,” said JPMorgan analyst Josh Meyers.

Maribel Lopez, founder of Lopez Research, expects the chipmaker to meet or exceed Wall Street’s expectations due to the “hot demand” for AI technology.

Analyzing the Fed’s Minutes

The Federal Reserve’s minutes from the latest meeting, expected at 20:00 Italian time, are likely to confirm that the next move will probably be another rate cut.
Policymakers first need more confidence that inflation is trending downwards again.

Federal funds futures imply a roughly 66% chance of a rate cut by September and have already priced in a 43 basis points easing for this year.

Several Fed voices emphasize the need for patience, with two officials – Loretta Mester and Susan Collins – reinforcing the message of higher interest rates for a longer period.

Separately, Christopher Waller stated on Tuesday that the central bank might consider cutting rates by the year-end if several months of good inflation data persist.
Bond traders are once again uncertain about the Fed delivering the two rate cuts that were priced in just last week.