New York Stock Market Falls Awaiting Nvidia Earnings... Focus on FOMC Minutes

NVIDIA to Announce Earnings After Market Close
Meeting Investor Expectations, Driving AI Rally?
May FOMC Minutes Also Released That Day

The three major indices of the U.S. New York stock market showed a slight decline on the 22nd (local time). Investors are adopting a cautious stance as they await the earnings report of Nvidia, which will be released after the market closes. The market is closely watching whether Nvidia can meet the high expectations and lead the artificial intelligence (AI) investment boom.

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As of 9:42 a.m. at the New York Stock Exchange (NYSE) on the day, the Dow Jones Industrial Average was down 0.02% from the previous close, standing at 39,866.77. The S&P 500, which focuses on large-cap stocks, fell 0.05% to 5,318.71, and the tech-heavy Nasdaq index declined 0.08% to 16,818.48.

Among individual stocks, major U.S. retailer Target saw its shares plunge 8.45% after its first-quarter sales fell 3% year-over-year, missing market expectations. Semiconductor company Analog Devices rose 6.28% following earnings that exceeded analyst forecasts. E-commerce company Shopify jumped 4.35% after Goldman Sachs upgraded its investment rating from 'neutral' to 'buy.'

Investor attention is focused on Nvidia, which will release its earnings after the market closes. According to market research firm LSEG, Nvidia is expected to report $24.6 billion in revenue and $12.83 billion in profit for the first quarter of the fiscal year (February to April). With explosive demand for AI chips, revenue and profit are projected to surge by 242% and 529%, respectively. Nvidia's stock price has risen about 90% this year and approximately 200% over the past year, driving the AI investment frenzy. The key question is whether Nvidia can meet investors' heightened expectations and lead a rally in tech stocks. The Nasdaq index has risen 12% so far this year.

Henry Allen, a strategist at Deutsche Bank, said, "Nvidia's earnings have become one of the most important events on the macro calendar." He added, "This situation was justified by a huge move afterward. The day after Nvidia announced its earnings in February, the S&P 500 surged 2.11%, marking its largest single-day gain in a year."

The market is also paying close attention to the minutes of the Federal Reserve's (Fed) May Federal Open Market Committee (FOMC) meeting, which will be released on the same day. Earlier, the Fed kept the benchmark interest rate steady at 5.25-5.5% for the sixth consecutive time following the FOMC meeting on the 1st, adding a phrase to the policy statement that inflation had not slowed as much as expected. Through the FOMC minutes, the market is expected to look for hints regarding the timing of rate cuts by examining Fed officials' comments on the current inflation situation and future interest rate path.

Fed officials reaffirmed their stance the previous day that inflation must be confirmed to be slowing further before any rate cuts. Fed Governor Christopher Waller stated that before lowering rates, inflation data supporting such a move must be confirmed "for several months." However, he dismissed the possibility of additional rate hikes. 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," adding, "If inflation is expected to decline relatively slowly, rate cuts are unlikely before the fourth quarter."

Tom Essaye, founder of Sevens Report Research, analyzed, "With stock prices at all-time highs, investors need to confirm economic indicators that remain in the Goldilocks zone, the absence of hawkish shocks from the Fed, steady yields, retailer earnings, and strong earnings outlooks from AI leaders like Nvidia to meaningfully advance beyond current levels."

Government bond yields are rising. The U.S. 10-year Treasury yield, a global bond yield benchmark, is trading at around 4.44%, up 2 basis points (1 bp = 0.01 percentage points) from the previous trading day. The 2-year U.S. Treasury yield, sensitive to monetary policy, remains steady at 4.87%.

International oil prices are falling amid growing concerns about demand due to rising U.S. inventories. West Texas Intermediate (WTI) crude oil fell 1.1% from the previous day to $77.82 per barrel, while Brent crude, the global oil price benchmark, dropped 1.1% to $81.98.