Nasdaq Futures Gain With All Eyes on Nvidia Earnings

December Nasdaq 100 E-Mini futures (NQZ25) are trending up +0.44% this morning, signaling a modest rebound from a bruising stretch of losses, while investors look ahead to an earnings report from AI darling Nvidia.

In yesterday’s trading session, Wall Street’s major indexes ended in the red. Home Depot (HD) slid over -6% and was the top percentage loser on the S&P 500 and Dow after the world’s largest home-improvement retailer reported weaker-than-expected Q3 comparable sales and cut its full-year earnings guidance. Also, chip stocks slumped, with Marvell Technology (MRVL) and Micron Technology (MU) falling more than -5%. In addition, Amazon.com (AMZN) sank more than -4% after Rothschild & Co. Redburn downgraded the stock to Neutral from Buy. On the bullish side, Medtronic Plc (MDT) climbed over +4% and was the top percentage gainer on the S&P 500 after the medical device maker posted upbeat FQ2 results and raised its full-year guidance.

Economic data released on Tuesday showed that U.S. factory orders rose +1.4% m/m in August, in line with expectations. Also, data from ADP Research showed that U.S. companies shed an average of 2,500 jobs per week in the four weeks ending November 1st.

Richmond Fed President Tom Barkin on Tuesday offered an upbeat outlook on inflation, while indicating the labor market may be softer than the available data suggest. Still, he did not indicate whether he will back another rate cut next month.

Meanwhile, U.S. rate futures have priced in a 53.4% chance of no rate change and a 46.6% chance of a 25 basis point rate cut at the December FOMC meeting.

Investors are eagerly awaiting Nvidia’s third-quarter earnings report, scheduled for release after the market close. The chipmaker’s earnings reports have been market-moving since May 2023, when it delivered the revenue growth forecast that reverberated globally. Skepticism toward the AI trade is now at its highest level since before Nvidia’s 2023 forecast, putting pressure on the company to deliver with its report.

“We expect Nvidia to exceed estimates and provide future earnings and revenue guidance that is higher than investors expect. It’s unlikely that Nvidia has seen any slowdown in demand for its products, even with increased competition, given how early we are in the AI cycle,” said James Demmert at Main Street Research.

Retailers such as TJX Companies (TJX), Lowe’s (LOW), and Target (TGT), along with cybersecurity firm Palo Alto Networks (PANW), are also set to report their quarterly figures today.

Market watchers will also pay close attention to the publication of the Fed’s minutes from the October 28-29 meeting. The FOMC lowered its benchmark rate last month for the second time this year, though Chair Jerome Powell cautioned that a December reduction is far from a “foregone conclusion.” Since then, a faction of Fed officials has intensified warnings that progress on inflation could slow or stall, casting doubt on the prospects for another rate cut next month and underscoring a widening divide within the central bank.

“We expect the minutes to show a deeply divided Fed with concerns over weaker employment picture but sticky inflation,” according to Mohit Kumar, chief economist and strategist for Europe at Jefferies.

In addition, market participants will be anticipating speeches from Fed Governor Stephen Miran, Richmond Fed President Tom Barkin, and New York Fed President John Williams.

On the economic data front, investors will focus on the August Trade Balance data, set to be released in a couple of hours. The data was originally scheduled for release on October 7th, but was delayed due to the government shutdown. Economists anticipate that the trade deficit will narrow to -$61.3 billion from -$78.3 billion in July.

The EIA’s weekly crude oil inventories report will be released today as well. Economists expect this figure to be -1.9 million barrels, compared to last week’s value of 6.4 million barrels.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.126%, up +0.10%.

The Euro Stoxx 50 Index is down -0.04% this morning, steadying after four consecutive sessions of steep losses. Consumer staples and energy stocks advanced on Wednesday. At the same time, bank stocks underperformed. Technology stocks also fell amid investor caution ahead of Nvidia’s earnings report that could either fuel or ease investor concerns over lofty valuations in the sector. Final data from Eurostat confirmed on Wednesday that the Eurozone’s annual inflation rate eased to 2.1% in October from 2.2% in the previous month. Separately, data from the Office for National Statistics showed that the U.K.’s annual inflation rate eased in October for the first time since May, bolstering expectations that the Bank of England will lower its key rate next month. In addition, data showed that the Eurozone’s current account surplus widened slightly in September as the goods surplus increased. Meanwhile, European Union industry chief Stephane Sejourne said on Wednesday that the bloc needs to swiftly build up stockpiles of critical minerals and cannot wait years for raw material agreements. In corporate news, Kering SA (KER.P.DX) fell over -2% after the luxury company’s Chief Executive Luca de Meo reportedly said that returning to growth will require reducing its dependence on struggling flagship Gucci, further trimming its store network, and pursuing additional synergies.

U.K. CPI, U.K. Core CPI, Eurozone’s CPI, Eurozone’s Core CPI, and Eurozone’s Current Account data were released today.

U.K. October CPI rose +0.4% m/m and +3.6% y/y, compared to expectations of +0.4% m/m and +3.5% y/y.

U.K. October Core CPI rose +0.3% m/m and +3.4% y/y, compared to expectations of +0.4% m/m and +3.4% y/y.

Eurozone’s October CPI rose +0.2% m/m and +2.1% y/y, in line with expectations.

Eurozone’s October Core CPI rose +0.3% m/m and +2.4% y/y, in line with expectations.

Eurozone’s September Current Account stood at 23.1 billion euros, stronger than expectations of 15.9 billion euros.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.18%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.34%.

China’s Shanghai Composite Index closed slightly higher today, snapping a three-day losing streak. Gains in energy and financial stocks led the overall market higher on Wednesday. At the same time, real estate and media stocks underperformed. Risk appetite remained subdued after U.S. stocks declined for a fourth straight session on Tuesday amid valuation concerns and uncertainty over a Fed rate cut next month. Sentiment was also dampened by worsening relations between Beijing and Tokyo following Japanese Prime Minister Sanae Takaichi’s recent comments on Taiwan. China said on Wednesday it halted imports of Japanese seafood. Rising geopolitical tensions could add new pressure to China’s struggling economy at a time when no policy easing appears on the horizon. Investor focus now turns to the People’s Bank of China, which is set to announce the country’s benchmark lending rate on Thursday. However, with China seemingly on track to meet its full-year growth target and banks’ net interest margins near record lows, economists widely expect the PBOC to leave rates unchanged in November. The consensus follows the PBOC’s decision this month to keep its seven-day reverse repo rate unchanged, which now serves as a key policy rate. In corporate news, Xiaomi slid over -4% in Hong Kong after the company cautioned that smartphone prices may rise further next year due to surging memory chip costs.

Japan’s Nikkei 225 Stock Index closed lower today, marking a fourth straight session of losses. Technology stocks led the declines on Wednesday, mirroring a drop in their U.S. peers overnight as valuation concerns persisted. The benchmark index swung between gains and losses before ending in negative territory, posting its longest losing streak in seven weeks. Japanese equities also came under pressure from rising domestic bond yields. Japanese government bond yields climbed to multi-year highs on Wednesday, fueled by concerns that a large economic stimulus package would place even more strain on the country’s already fragile fiscal position. Prime Minister Sanae Takaichi is expected to finalize a package totaling about 17 trillion yen ($109 billion) this week, according to Carol Kong, a strategist at Commonwealth Bank of Australia. The need for this spending was underscored by data earlier this week showing that the nation’s economy contracted in the third quarter for the first time since early 2024. Meanwhile, data released on Wednesday showed that Japan’s monthly core machinery orders, a key leading indicator of capital spending, rebounded much more than expected in September. In other news, China said on Wednesday it halted imports of Japanese seafood, marking the latest escalation in its dispute with Japan over Taiwan. China also warned that it would “have no choice but to take further measures” unless Japan retracts its “wrong remarks” and takes concrete steps to “safeguard the political foundation” of their bilateral relationship. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +3.63% to 36.56.

The Japanese September Core Machinery Orders rose +4.2% m/m and +11.6% y/y, stronger than expectations of +2.2% m/m and +5.4% y/y.

Pre-Market U.S. Stock Movers

Chip stocks are moving higher in pre-market trading, with ON Semiconductor (ON) rising over +3% and Micron Technology (MU) gaining more than +2%.

Lowe’s (LOW) climbed over +6% in pre-market trading after the home-improvement retailer reported better-than-expected Q3 adjusted EPS.

Constellation Energy (CEG) advanced more than +2% in pre-market trading after the electricity provider announced that the U.S. Department of Energy had loaned it $1 billion to fund the restart of the nuclear plant at Three Mile Island in Pennsylvania.

DoorDash (DASH) rose over +2% in pre-market trading after Jefferies upgraded the stock to Buy from Hold with a price target of $260.

La-Z-Boy (LZB) advanced more than +3% in pre-market trading after the furniture maker posted better-than-expected FQ2 results.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - November 19th

Nvidia (NVDA), TJX (TJX), Palo Alto Networks (PANW), Lowe’s (LOW), NetEase (NTES), Target (TGT), Viking Holdings (VIK), Williams-Sonoma (WSM), ZTO Express Cayman (ZTO), Dycom Industries (DY), Wix.Com Ltd (WIX), GlobalE Online (GLBE), GDS Holdings (GDS), Bullish (BLSH), Copa (CPA), NewJersey Resources (NJR), Valvoline (VVV), Kingsoft Cloud (KC), BBB Foods (TBBB), Griffon (GFF), JOYY Inc (JOYY), Oddity Tech (ODD), Kulicke&Soffa (KLIC), Universal Technical Institute (UTI), FinVolution Group (FINV), Nayax (NYAX), BrightView Holdings (BV).