Strong Nvidia earnings fail to lift US markets

US stocks experienced a downturn on Thursday, marking the Dow Jones Industrial Average's worst performance of 2024, as a post-earnings boost from Nvidia failed to uplift the broader market sentiment.

The Dow declined 1.53 per cent, closing at 39,065.26 for its lowest session of the year. Boeing emerged as the biggest drag on the Dow, plunging by 7.6 per cent. Meanwhile, the S&P 500 fell by 0.74 per cent, settling at 5,267.84, and the Nasdaq Composite dropped by 0.39 per cent, concluding at 16,736.03.

Earlier in the day, both the broad-market index and the tech-focused benchmark reached record highs. Nvidia, a leading chipmaker and artificial intelligence company, surged by 9.3 per cent, pushing its shares above $1,000 after reporting robust fiscal first-quarter results and announcing a 10-for-1 stock split.

Nvidia's fiscal second-quarter revenue projection of approximately $28 billion also exceeded the consensus forecast of $26.61 billion from LSEG, indicating sustained momentum for the company. Analysts anticipate earnings of $5.95 per share for the bottom line.

Wall Street closely monitored Nvidia's performance, seeking reassurance that the enthusiasm surrounding artificial intelligence remains strong. With a market capitalization exceeding $2.5 trillion, Nvidia significantly influences the broader S&P 500.

However, despite Nvidia's standout performance, the majority of stocks in the broader market index turned negative on Thursday, signalling a lack of market breadth. Over 400 stocks in the S&P 500 registered declines, with only the information technology sector posting gains for the day.

Additionally, stronger-than-expected economic data dampened the market rally as investors reassessed the likelihood of a rate cut in September. Both services and manufacturing data for May surpassed economists' expectations, according to purchasing manager surveys from S&P Global released on Thursday. Initial jobless claims for the week ending May 18 totaled 215,000, lower than the 220,000 forecasted by economists polled by Dow Jones. These results heightened concerns among investors that the Federal Reserve may delay interest rate cuts.

Traders are currently pricing in just a 51 per cent probability of a rate cut at the Fed's September meeting, down from 58 per cent the previous day and nearly 68 per cent in the prior week, according to the CME FedWatch Tool. A probability below 60 per cent suggests that a rate cut is no longer considered likely by the Fed.

Turning to US sectors, all closed lower overnight except for Tech, closing 0.6 per cent higher. Consumer Discretionary was the worst performer.

Futures

The SPI futures are pointing to a 1.1 per cent fall.

Currency

One Australian dollar at 7.45am was buying 66.06 US cents.

Commodities

Gold has lost 2.55 per cent. Silver has dropped 3.80 per cent. Copper has fallen 1.57 per cent. Oil has lost 0.64 per cent.

Figures around the globe

European markets closed mixed. London’s FTSE fell 0.37 per cent, Frankfurt added 0.06 per cent, and Paris closed 0.13 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei added 1.26 per cent, Hong Kong’s Hang Seng fell 1.70 per cent while China’s Shanghai Composite closed 1.33 per cent lower.

Yesterday, the Australian share market closed 0.46 per cent lower at 7,811.80

Ex-dividends
Cardno (ASX:CDD) is paying 10 cents unfranked
Whitefield Ind (ASX:WHF) is paying 10.25 cents fully franked

Dividends payable
Prestal Holdings Ltd (ASX:PTL)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

Disclaimer

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