US Stock Futures Fall Ahead of Nvidia Earnings: Markets Wrap

(Bloomberg) — Concerns about whether Nvidia Corp. can post another big profit sent U.S. stock futures lower on Wednesday, with investors questioning the longevity of the obsession with artificial intelligence.

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The company, described by Goldman Sachs Group Inc.'s trading desk, could… It is considered “the most important stock on Earth” to shake the markets due to its heavy weight in stock indices. Nvidia is at the heart of the AI ​​revolution, boasting the best performance in the S&P 500 this year after more than tripling in 2023.

S&P 500 futures fell 0.2% and Nasdaq futures lost about 0.5%, suggesting Wall Street could see a third day of declines. Nvidia stock fell 1.7% in premarket trading after falling 4.4% yesterday. The company is scheduled to announce its results after the close.

“These earnings today appear to be a measure of where we are in the global cycle,” said Justin Onwuekosi, chief investment officer at St James's Place. “Concentration in the stock market has reached levels where a single company's earnings can have a significant impact on the overall economy. It has gone beyond just a matter of constructing a portfolio; it is a major challenge that you cannot escape.”

In other notable pre-market stock moves, Palo Alto Networks Inc. By more than 20% after the cybersecurity company cut its revenue forecasts. Amazon.com Inc stock rose. by 1.2% after replacing Walgreens Boots Alliance Inc. In the Dow Jones Industrial Average. Walgreens stock fell 2.8%.

The 10-year Treasury yield fell 1 basis point, and the dollar measure was flat.

Meanwhile, European stock indexes fell from a near-record level amid disappointing earnings from some of the region's largest companies.

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The Stoxx Europe 600 index fell, still about four points away from its peak in January 2022. Banks were among the most notable losers with HSBC Holdings Plc falling more than 7% after announcing an 80% drop in fourth-quarter profits.

Weak earnings from commodities trader Glencore and Rio Tinto, the world's largest iron ore miner, weighed on the basic resources sub-index, which fell to its lowest level in four months. On the positive side, Carrefour rose after the French grocer announced a share buyback, even as quarterly sales disappointed.

Positive economic surprises boosted European stocks even as traders scaled back their bets on interest rate cuts by the European Central Bank. Volatility measures are at historic lows, suggesting some complacency has crept into a market that still faces potential headwinds, including rising bond yields, according to Bloomberg Intelligence.

“European stocks could consolidate recent gains in the near term as investor sentiment appears overheated,” Laurent Douillet and Tim Craighead, strategists at BI, wrote in a report. “Rising government bond yields have not dampened enthusiasm so far, with highly leveraged companies outperforming slightly and remaining a key risk to stocks in 2024.”

Elsewhere, Chinese stocks rose after policymakers took more steps to revive investor confidence, defying broader weakness in Asia after a technology-led decline on Wall Street.

The index of Chinese companies listed in Hong Kong jumped as much as 4% before paring its gains, while the CSI 300 index of mainland stocks rose 1.4%. Real estate developers led the gains after banks ramped up their financing assistance to the troubled sector. A new crackdown on trading through quantitative funds has also reduced concerns about short selling. This is in contrast to losses in other Asian markets.

In the commodity space, aluminum rose amid speculation that a new wave of US sanctions against Russia may target the metal, which could disrupt supplies. Iron ore futures reached their lowest levels since October after a volatile session in which prices flipped between gains and losses. Oil fell lower.

Main events this week:

• Consumer confidence in the euro zone, Wednesday

• Nvidia earnings Wednesday

• The Federal Reserve releases minutes from its January meeting on Wednesday

• Atlanta Fed President Rafael Bostic speaks Wednesday

• Eurozone Purchasing Managers' Index (PMI) for global services, S&P Global Manufacturing Index, and Consumer Price Index, Thursday

• US Initial Jobless Claims and US Existing Home Sales, Thursday

• The European Central Bank releases its January meeting account, Thursday

• Fed Governor Lisa Cook and Minneapolis Fed President Neel Kashkari speak Thursday

• Real estate prices in China today, Friday

• Germany Ifo Business Climate, GDP, Friday

• The European Central Bank publishes its one- and three-year inflation expectations survey on Friday

Some key movements in the markets:

Stores

• S&P 500 futures were down 0.2% as of 6:42 a.m. New York time.

• Nasdaq 100 futures fell 0.4%

• Dow Jones Industrial Average futures fell 0.2%

• The Stoxx Europe 600 index fell by 0.2%.

• The MSCI World Index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro fell 0.1 percent to $1.0796

• There was little change in the pound sterling at $1.2612

• There was little change in the Japanese yen at 150.05 to the dollar

Digital currencies

• Bitcoin fell 1.9% to $51,045.11

• Ethereum fell 2.7% to $2,908.55

Bonds

• The yield on the 10-year Treasury note fell by 2 basis points to 4.26%.

• The yield on 10-year German bonds was little changed at 2.38%.

• The yield on British 10-year bonds rose one basis point to 4.05%.

Goods

• West Texas Intermediate crude fell 0.7% to $76.49 a barrel

• Gold in spot transactions rose 0.2 percent to $2,027.84 per ounce

This story was produced with assistance from Bloomberg Automation.

-With assistance from Rob Verdonk and Winnie Hsu.

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