The Dow Jones Industrial dropped 0.51% at the close. and amounted to 39,671.04 points. It was the worst day for this index since the beginning of May. The S&P 500 lost 0.27% at the end of the day. and amounted to 5,307.01 points. The Nasdaq Composite fell 0.18%. and closed the session at 16,801.54 points. The Russell 2000 index of small-cap companies is down 0.96%. up to 2,078.10 points The VIX volatility index increases by 2.87%, to 12.20 points.
Investors have been waiting all day for Nvidia's first quarter results
“With stocks at record highs, investors will need to see economic data that remains very strong, no hawkish surprises from the Fed, stable yields, strong retailer profits, and solid guidance from Nvidia to significantly exceed current levels,” he said. as reported by Sevens Report's Tom Essaye. The swaps market currently expects Fed interest rates to be reduced by approximately 40 basis points. by the end of the year, with the probability of the first reduction in September estimated at 66%.
Fed Governor Christopher Waller said the recent report on US price pressures was a reassuring sign. Waller indicated during an interview on CNBC that further easing of macro data over the next 3-5 months will enable the Federal Reserve to consider reductions in borrowing costs at the end of 2024. Loretta Mester, head of the Cleveland Fed, would like to see “a few more months of inflation data that look like CPI is about to fall” before the Fed lowers interest rates. Mester will step down from the FOMC in June when her term expires.
Boston Fed President Susan Collins also wants to see more evidence that price pressure in the US is heading towards the Fed's target of 2%. “Inflation actually started to come down, but then it seems to have stalled at around 3.5%. and everyone is trying hard to find a narrative as to why it's stuck at this level and I think that's the challenge,” said Julian Howard, chief investment officer of multi-asset solutions at GAM. The highlight of the day so far was the publication of the minutes of the last Fed meeting, but investors were also waiting all day for the results for the first quarter of Nvidia, which will be presented after the end of the session.
Some FOMC members support interest rate increases. in the USA if necessary – according to the minutes of the last Fed meeting. Many participants remain uncertain about the impact of high interest rates. on the economy. “Meeting participants discussed maintaining the current restrictive policy stance for longer if inflation did not show signs of persistently approaching 2 percent or reducing the restrictive stance in monetary policy in the event of an unexpected weakening in labor market conditions. Some meeting participants mentioned a desire to further tighten policy “if the risk to inflation materializes, making such action justified,” it was written in the minutes after the Fed meeting held on April 31-May 1.
“Although monetary policy was perceived as restrictive, many meeting participants commented on the uncertainty about the degree of restrictiveness of interest rates on the economy. These meeting participants viewed this uncertainty as arising from the possibility that high interest rates may have less of an impact than in the past, that the equilibrium level of long-term interest rates may be higher than previously thought or that the level of economic activity may be lower than estimated,” it added. However, participants assessed that monetary policy remains well prepared to respond to changing economic conditions and threats to the outlook,” it added.
In the opinion of Fed members, the prospects for the US economy and inflation are still subject to a great deal of uncertainty. “Meeting participants continue to expect inflation to return to 2% over the medium term. However, the latest data did not increase their confidence in progress towards the target and therefore suggested that the disinflation process is likely to take longer than previously thought. The meeting participants discussed several factors that, combined with an appropriately restrictive monetary policy, could over time support inflation returning to the Committee's target,” the report wrote.
“Investors want to see whether Nvidia's impressive momentum in 2023 will translate into 2024.”
“Although some measures of short-term inflation expectations as determined by consumer surveys have increased in recent months, medium- and long-term measures of expected inflation remained well anchored, which was considered crucial to the sustained achievement of the Committee's inflation target,” it added. The minutes show that FOMC members believe that GDP growth will slow down compared to last year.
Nvidia shares fell less than 1 percent. After the session, the company publishes its results for the first quarter. “This is a key event. It may seem strange that markets depend largely on the results of one company, but in recent quarters this publication has become one of the most important events in the macro calendar,” Deutsche Bank analysts wrote in the report.
“Despite the recent incredible performance of the company's shares, there is tension in the market, and investors want to see whether Nvidia's impressive dynamics from 2023 will translate into 2024. We should remember that the bar is set quite high,” said Sam North, an analyst at the investment platform eToro.
Target shares fell about 8%. Quarterly results and earnings forecasts for the second quarter were below expectations. Clothing retailer Urban Outfitters fell more than 5%. although first-quarter results exceeded strong demand estimates. Lululemon Athletica fell more than 8%. after the sportswear retailer announced the departure of chief product officer Sun Choe.
Sales of homes on the secondary market in the US in April amounted to 4.14 million on an annual basis vs. the expected 4.23 million – reported the National Association of Realtors. A month earlier, the indicator amounted to 4.22 million, after correction from 4.19 million. In month-to-month terms, the indicator decreased by 1.9%. compared to -3.7 percent a month earlier, after correction from -4.3 percent. Expected +0.8%.
US crude oil inventories last week increased by 2.51 million barrels, or 0.4 percent, to 458.85 million barrels. Gasoline stocks fell by 945,000 during this time. barrels, or by 0.1 percent, to 226.82 million barrels. Reserves of distilled fuels, including heating oil, increased by PLN 379,000. barrels, or by 0.33 percent, to 116.74 million barrels. On the oil market, WTI contracts for July are down 1.70%. to USD 77.32 per barrel, and July Brent futures fall by 1.46%. up to USD 81.67/b.
