New York Stock Market Mixed Ahead of Nvidia Earnings and FOMC Minutes

NVIDIA Earnings Release on the 22nd
Will the FOMC Minutes Provide Clues on the Interest Rate Path?

The three major indices of the U.S. New York stock market showed mixed trends in early trading on the 20th (local time). Following the Dow Jones Industrial Average breaking the 40,000 mark for the first time ever last week based on closing price, the first trading day of this week is showing a cautious tone, moving within a narrow range. The market is focusing on the upcoming Nvidia earnings report and the Federal Open Market Committee (FOMC) minutes to be released this week.

As of 9:46 a.m. at the New York Stock Exchange (NYSE) on the day, the Dow Jones Industrial Average was down 0.2% from the previous close, standing at 39,923.68. The S&P 500, which is centered on large-cap stocks, rose 0.19% to 5,313.45, while the tech-heavy Nasdaq index was up 0.52% at 16,772.2.

By individual stocks, Johnson Controls, confirmed to be held by U.S.-based hedge fund Elliott Management with over $1 billion in shares, jumped 2.94%. Nvidia, which is scheduled to report earnings this week, rose 2.24%. Microsoft (MS) was up 1.19%.

The biggest market focus this week is Nvidia's earnings announcement on the 22nd. According to market research firm LSEG, Nvidia is expected to report revenue of $24.6 billion and profit of $12.83 billion for the first quarter of the fiscal year (February to April). This represents a surge of 242% in revenue and 529% in profit, respectively. With explosive growth in demand for artificial intelligence (AI) chips, Nvidia's strong earnings are expected to continue.

Inge Heidorn of British investment bank G.P. Bulhound stated, "The only thing currently that can hinder Nvidia is supply."

Tom Lee, Head of Research at Fundstrat Global Advisors, analyzed, "Overall, we expect earnings to enhance visibility on AI and related spending," adding, "As a result, it will be positive for tech stocks and the broader market."

The May FOMC minutes will also be released on the 22nd. Earlier, the U.S. Federal Reserve (Fed) kept the benchmark interest rate unchanged at 5.25-5.5% for the sixth consecutive time immediately after the FOMC meeting on the 1st. The policy statement newly included language indicating that inflation has not slowed as much as expected, and Fed Chair Jerome Powell also said, "Confidence in the decline of inflation is weakening." However, regarding further rate hikes, he drew a line, saying, "The likelihood is very low." The market is expected to scrutinize Fed officials' comments on the current inflation situation and future interest rate path through the FOMC minutes. Especially, with the core Consumer Price Index (CPI) for April recording the lowest increase in three years, market expectations for rate cuts within the year are rising.

Corporate earnings announcements will continue this week. Palo Alto Networks, AutoZone, Target, and Ralph Lauren are among those scheduled to report.

Government bond yields are rising. The U.S. 10-year Treasury yield, a global bond yield benchmark, rose 3 basis points (1bp = 0.01 percentage points) from the previous trading day to 4.45%, while the 2-year U.S. Treasury yield, sensitive to monetary policy, moved up 1bp to around 4.84%.

International oil prices are declining. West Texas Intermediate (WTI) crude oil fell $0.43 from the previous trading day to $79.63 per barrel, and Brent crude, the global oil price benchmark, dropped $0.35 to $83.63 per barrel.