US Stocks Fall Ahead of Nvidia Earnings – Nasdaq Down 1.1%
US stock markets experienced a downturn in trading yesterday as investors reduced their exposure ahead of the key Nvidia earnings report. The Dow dropped 0.39%, the S&P 500 fell 0.60%, but it was the Nasdaq that bore the brunt of the decline, losing 1.12% on the day. Nvidia’s earnings slightly exceeded average expectations, yet the stock still fell nearly 3.5% in after-hours trading. US Treasury yields steadied, with the 2-year yield increasing by 0.6 basis points to 3.871%, and the 10-year yield rising by 1.1 basis points to close at 3.844%. Meanwhile, the dollar strengthened across the board, gaining 0.5% on the index. Oil prices dropped again following a smaller-than-expected decline in US inventories, with Brent falling 1.13% to $78.65 and WTI down 1.34% to $74.52. Gold also declined, in line with the stronger dollar, losing 0.8% on the day to settle at $2,505 at the New York close.
Inflation Data Moves into Market Focus
US inflation data now takes centre stage in investor focus over the next few trading sessions, as the market anticipates the first of three key updates from the US before the Federal Reserve makes its final rate decision next month. The PCE Price Index is due out on Friday, with a 0.2% month-on-month increase expected. Any significant deviation from this could alter expectations for a Fed rate cut. The other two major components of the rate cut decision will be revealed in the following weeks, with the Non-Farm Payrolls report due at the end of next week, followed by the CPI numbers the week after. The market currently favours a 25-basis point cut, but weaker data from these key updates could shift expectations towards a 50-basis point cut, which would likely impact yields and the dollar.
Traders Brace for More Moves Ahead of Inflation Numbers
It looks set to be another busy day for traders today, with key data releases scheduled ahead of tomorrow’s US PCE report. The Asian session today has little on the agenda, with markets expected to open on a weaker note after a lacklustre day on Wall Street. However, the next two sessions should see more activity. The European session will feature the release of key German Prelim CPI figures throughout the day, as individual states report their data, alongside the Spanish Flash CPI numbers. The US session also has several important tier 1 data releases, including the latest quarterly GDP data and the weekly unemployment claims figures. Pending Home Sales numbers are also expected later in the session, and Swiss National Bank Chair Thomas Jordan is set to speak in Basel.
