[New York Stock Market] Rising Ahead of Nvidia Earnings... S&P 500 and Nasdaq Reach All-Time Highs

NVIDIA Earnings and FOMC Minutes Released Next Day
Fed Governor Waller: "Monitoring Inflation Indicators for Several Months"

The three major indices of the U.S. New York stock market all closed higher on the 21st (local time). Amid rising expectations for Nvidia's earnings to be released after the market close the next day, the S&P 500 and Nasdaq indices reached new all-time highs again.

On that day at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average closed at 39,872.99, up 66.22 points (0.17%) from the previous trading day. The large-cap-focused S&P 500 rose 13.28 points (0.25%) to 5,321.41, and the tech-heavy Nasdaq increased by 33.75 points (0.22%) to 16,832.62, setting new record highs.

By individual stocks, cybersecurity company Palo Alto Networks fell 3.74% after issuing a disappointing earnings outlook the previous day. JP Morgan, whose CEO Jamie Dimon is known as the "Emperor of Wall Street," dropped 4.5% following his indication of early retirement the day before but rebounded 1.96% to close higher on the day. Apple rose 0.69%. Bloomberg reported that Apple plans to request the U.S. court to dismiss the Department of Justice's antitrust lawsuit. Nvidia, which will announce earnings the next day, rose 0.64%.

The market is focusing on the earnings announcement of AI superstar Nvidia. According to market research firm LSEG, Nvidia is expected to post revenue of $24.6 billion and profit of $12.83 billion for the first quarter of the fiscal year (February to April). With explosive demand for AI chips, revenue and profit are expected to surge by 242% and 529%, respectively. Nvidia's stock price has risen over 90% this year and more than 200% over the past year, and investors are keenly watching the upcoming quarterly earnings to determine whether the rally will continue.

Matt Lowy, Head of Cross-Asset Strategy at Nomura Private Capital, analyzed, "Investors do not want to miss out on joining the rally if good numbers come out. But on the flip side, if the earnings are uninteresting or lack constructive feedback, very tough and rapid sell-offs could occur."

The market also paid attention to remarks from Federal Reserve (Fed) officials on that day. Fed officials reaffirmed their existing stance that inflation slowdown must be further confirmed before any rate cuts.

Christopher Waller, a Fed Governor known as a "hawk" (favoring monetary tightening), said that before lowering rates, inflation data supporting such a move must be confirmed "for several months." However, he added, "The data show that inflation has not accelerated," and he believes "further increases in the policy rate are unnecessary."

Raphael Bostic, President of the Federal Reserve Bank of Atlanta, said, "It is better to wait longer before cutting rates to prevent inflation from rebounding," and expressed a desire to ensure that policy easing is not ambiguous before rushing rate cuts. He stated, "If inflation is expected to decline relatively slowly, rate cuts should not be expected before the fourth quarter."

Case Buchan, Senior Portfolio Manager at Globalt Investments, analyzed, "The story of disinflation (slowing inflation rate) remains intact. If corporate profitability is confirmed through earnings, the market will continue to move higher."

On the 22nd, the minutes of the Fed's May Federal Open Market Committee (FOMC) meeting will also be released. Earlier, the Fed kept the benchmark interest rate unchanged at 5.25-5.5% for the sixth consecutive time immediately after the May 1 FOMC meeting, adding a phrase in the policy statement that inflation has not slowed as much as expected. The market is expected to scrutinize Fed officials' comments on the current inflation situation and future rate path through the FOMC minutes.

U.S. Treasury yields are declining. The 10-year U.S. Treasury yield, a global bond yield benchmark, is trading at around 4.41%, down 2 basis points (bp) (1 bp = 0.01 percentage point) from the previous trading day. The 2-year U.S. Treasury yield, sensitive to monetary policy, is trading slightly lower at about 4.83% compared to the previous day.

International oil prices weakened as Fed officials expressed cautious views on rate cuts. West Texas Intermediate (WTI) crude fell $0.54 (0.7%) to close at $79.26 per barrel, and Brent crude, the global oil price benchmark, dropped $0.83 (1%) to $82.88.