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Nvidia to report, Fed minutes in focus - what's moving markets

February 21, 2024 5:20 AM EST

Investing.com -- U.S. stock futures tick marginally lower ahead of a busy day that will feature much-anticipated results from AI-darling Nvidia (NASDAQ: NVDA) and minutes from the Federal Reserve's January gathering. Elsewhere, Amazon (NASDAQ: AMZN) founder Jeff Bezos sells a fresh batch of shares in the e-commerce behemoth, bringing the proceeds from a raft of recent stock sales to $8.5 billion.

1. Futures marginally lower

U.S. stock futures pointed slightly lower on Wednesday, as investors geared up for key earnings from artificial intelligence chipmaking giant Nvidia and minutes from the Federal Reserve's latest policy meeting.

By 03:00 ET (08:00 GMT), the Dow futures contract had shed 33 points or 0.1%, S&P 500 futures had dipped by 4 points or 0.1%, and Nasdaq 100 futures had fallen by 31 points or 0.2%.

The main averages slipped in the prior session, with the tech-heavy Nasdaq Composite in particular falling by 0.9%. Weakness in Nvidia shares weighed on the index, in a sign that traders may be balking at the firm's expensive valuation prior to the release of its fourth-quarter results.

But an upbeat sales forecast and a dividend boost lifted Walmart (NYSE: WMT) to a record high, helping put a floor on losses in the Dow Jones Industrial Average. The blue-chip index declined by 0.2%, while the benchmark S&P 500 retreated by 0.6%.

2. Nvidia earnings loom large

Nvidia will report after the U.S. market close later today, and is expected to clock per-share profit of $4.58 on a revenue of $20.37 billion.

The California-based group wiped out about $100 billion in market capital on Tuesday, as investors waited to see whether a massive earnings spike it has previously forecast materialized.

The results may also potentially justify Nvidia’s sharp run-up in valuation, currently at a forward price-to-earnings ratio of a little over 32. Given Nvidia's central role in a recent surge in enthusiasm over the applications of artificial intelligence, markets will be keeping a sharp eye out for any guidance from the company about future AI demand as well.

Anticipation ahead of the earnings saw most Asian chipmaking stocks turn skittish on Wednesday. Japanese semiconductor testing equipment maker Advantest Corp. (TYO:6857) and TSMC (TW:2330) -- the world’s largest contract chipmaker -- fell. Both firms are major suppliers to Nvidia.

3. Fed minutes ahead

Focus will also be on the publication of minutes from the Federal Reserve's late-January policy meeting, with markets on the lookout for any cues about the potential trajectory of U.S. interest rates.

The central bank kept rates steady during the meeting, but largely downplayed expectations of early interest rate cuts. Fed Chair Jerome Powell in particular said that a move to lower borrowing costs down from more than two-decade highs as soon as March was not his "base case."

Since then, a string of hotter-than-expected U.S. inflation readings have persuaded markets to further price out the prospect of imminent rate reductions. According to Investing.com's Fed Rate Monitor Tool, traders are now betting that the central bank will roll out its first 25-basis point cut in June.

4. Bezos sells more Amazon shares

Jeff Bezos has sold a further chunk of shares in Amazon, a filing with the U.S. Securities and Exchange Commission showed on Tuesday, capping off in days a planned offload of up to 50 million shares in the e-commerce titan that was originally expected to end next January.

Bezos -- Amazon's founder and now its executive chairman -- sold 14 million in Amazon stock that was worth roughly $2.4 billion over three trading days ending on Tuesday, the filing showed.

Following the transaction, the billionaire has now netted $8.5 billion from his move to steadily sell stakes in the company in recent weeks. Bezos, the world's third-richest person according to Forbes, has yet to say what he will do with the proceeds from the sales.

5. Oil prices tick higher

Oil prices edged up in European trade on Wednesday as concerns remained over possible supply disruptions from a sustained conflict in the Middle East, although demand worries placed a lid on the gains.

The dollar pulled back marginally before the release of minutes from the Federal Reserve’s latest meeting, offering some relief to overseas buyers of dollar-denominated oil. Traders will be watching the minutes closely as they attempt to gauge if U.S. interest rates will stay higher for longer, a prospect that could dent economic activity in the world's largest oil consumer.

Any major downside in oil prices was largely limited by persistent concerns over the ongoing conflict in the Middle East, which appears to be disrupting some supplies.

The U.S. vetoed a United Nations resolution calling for an immediate ceasefire in Gaza, pointing to little signs of deescalation in the Israel-Hamas war. The veto was Washington's third in recent months.

By 08:00 ET, Brent oil futures expiring in April had risen 0.2% to $82.47 a barrel, while West Texas Intermediate crude futures had ticked up by 0.2% to $76.74 per barrel.


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