Stock Traders on Edge as Nvidia Countdown Underway: Markets Wrap

(Bloomberg) — US equity futures edged lower ahead of a key earnings release from Nvidia Corp., the $3 trillion stock at the forefront of the global artificial-intelligence frenzy.

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Seen as a barometer for AI spending across much of the technology industry, Nvidia is expected to project revenue growth of more than 70% for the current quarter when it reports after market close on Wednesday. Any disappointment is certain to roil markets, given the company’s heft in US indexes — the options market is implying swings of nearly 10% in either direction on the day after the results.

Contracts on the Nasdaq 100 and the S&P 500 edged lower. Nvidia shares were steady in premarket trading, having rallied about 160% this year, far outpacing a 16.4% year-to-date gain for the Nasdaq 100.

“The Nvidia result has become very much like a macro event, in some ways as big as the payrolls and CPI releases in terms of market impact,” said Justin Onuekwusi, chief investment officer at wealth manager St James Place. “There’s a lot of money, a lot of leverage in these consensus names and it will take only a slight disappointment to cause significant volatility in markets.”

The Nvidia report and earnings guidance are seen as crucial at a time when markets are grappling with the possibility of a US recession and whether the Federal Reserve can cut interest rates fast enough to engineer a soft landing. Money markets currently price about 100 basis points worth of interest rate cuts this year, starting September.

While the dollar rose about 0.3% against a basket of currencies on Wednesday, it’s still on track for its steepest monthly decline this year, undermined by rate-cut bets. Most other currencies lost ground, with the euro dropping 0.6%. In bond markets, yields slipped, especially in the euro area, after Austria decided not to proceed with a long-maturity bond sale.

Among individual stock movers, Super Micro Computer Inc. shares were set to extend Tuesday’s losses after Hindenburg Research said it’s short the maker of server equipment. Bitcoin’s fall below the $60,000 level precipitated a drop in crypto-linked stocks such as as Cleanspark Inc. and Coinbase Global Inc. Kohl’s Corp. added 4.2% after the retailer raised its full-year earnings forecasts.

In Europe, GSK Plc gained after the Delaware Supreme Court decided to review a lower state court decision related to litigation over the firm’s Zantac heartburn medication. The Stoxx 600 index rose 0.5%

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In commodity markets, gold retreated after a three-day advance that took it closer to its all-time high, while Brent crude futures shed 1.5%, adding to the previous day’s slide.

Key events this week:

• Nvidia earnings, Wednesday

• Fed’s Raphael Bostic and Christopher Waller speak, Wednesday

• Eurozone consumer confidence, Thursday

• US GDP, initial jobless claims, Thursday

• Fed’s Raphael Bostic speaks, Thursday

• Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday

• Eurozone CPI, unemployment, Friday

• US personal income, spending, PCE; consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.4% as of 1:13 p.m. London time

• S&P 500 futures fell 0.1%

• Nasdaq 100 futures fell 0.2%

• Futures on the Dow Jones Industrial Average were little changed

• The MSCI Asia Pacific Index was little changed

• The MSCI Emerging Markets Index fell 0.2%

Currencies

• The Bloomberg Dollar Spot Index rose 0.3%

• The euro fell 0.6% to $1.1115

• The Japanese yen fell 0.4% to 144.53 per dollar

• The offshore yuan fell 0.2% to 7.1328 per dollar

• The British pound fell 0.4% to $1.3209

Cryptocurrencies

• Bitcoin fell 3% to $60,016.57

• Ether fell 2% to $2,528.63

Bonds

• The yield on 10-year Treasuries was little changed at 3.82%

• Germany’s 10-year yield declined four basis points to 2.25%

• Britain’s 10-year yield declined two basis points to 3.98%

Commodities

• Brent crude fell 1.4% to $78.44 a barrel

• Spot gold fell 1% to $2,498.71 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Michael Hennessey.

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