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Nvidia's blockbuster earnings, Fed minutes - what's moving markets

February 22, 2024 5:09 AM

Investing.com -- Nvidia's revenue skyrockets above Wall Street projections in the fourth quarter, sending shares in the artificial intelligence chipmaking giant's soaring in extended trading. Elsewhere, minutes from the Federal Reserve's January meeting show that officials at the U.S. central bank were wary about cutting interest rates too soon.

1. Nvidia revenues top estimates as chipmaker hails AI "tipping point"

Shares in Nvidia (NASDAQ: NVDA) jumped in U.S. after market trade on Wednesday, touching a new record high, after the chipmaker clocked stronger-than-expected fourth-quarter revenues and delivered a sales outlook for the current three-month period that was also above Wall Street estimates.

Chief Executive Jensen Huang, weighing in on the boom in artificial intelligence that has fueled a surge in the company's valuation over the past 12 months, said the nascent technology is at a "tipping point."

"Demand is surging worldwide across companies, industries and nations," he said.

Gains in Nvidia, which manufactures the graphics processors that help train AI systems, spilled into Asian semiconductor stocks.

Japanese semiconductor testing equipment maker -- and Nvidia's biggest supplier -- Advantest Corp. (TYO:6857) rose and was within sight of a record high. Taiwan’s TSMC (TW:2330), the world’s biggest contract chipmaker and a key Nvidia supplier, climbed close to an all-time high as well.

2. Futures higher after Nvidia reports

U.S. stock futures pointed to a positive opening in New York on Thursday, with investors hailing Nvidia's 265% spike in revenue and bullish outlook for AI demand.

By 03:11 ET (08:11 GMT), the futures contract for the tech-heavy Nasdaq 100 had jumped by 317 points or 1.8%, while Dow futures had risen by 114 points or 0.3% and S&P 500 futures had gained 50 points or 1.0%.

Along with being one of the so-called "Magnificent 7" group of megacap stocks that combined to account for more than 60% of the S&P 500's total return in 2023, Nvidia is also seen as a bellwether of the AI boom that has helped underpin recent strength in equities.

Speaking with investors, Huang said Nvidia's high-end chips had become the "AI-generation factories" in a new industrial revolution that will encompass "every industry." The company is now looking to bolster this position, although analysts have flagged that intensifying competition and cooling sales in China may complicate this task.

3. Federal Reserve officials uncertain about early interest rates cuts - minutes

Federal Reserve policymakers signaled that they were worried about slashing interest rates too soon, saying they needed further confidence that price pressures were continuing to abate, according to the minutes of the Federal Reserve’s January policy meeting released on Wednesday.

The minutes showed that "they did not expect it would be appropriate to reduce the target range" for the key federal funds rate until they had "greater confidence" that inflation was cooling back down towards its 2% target.

At the conclusion of the gathering on Jan. 31, the Federal Open Market Committee, or FOMC, kept its benchmark rate at a more than two-decade high of 5.25% to 5.5%. But the minutes suggested that the central bank believed rates were likely at their peak "for this tightening cycle."

Since the meeting, economic data points have suggested that putting out the lingering embers of inflation could prove to take longer than anticipated, placing bumps on the road to a "soft landing" -- a scenario in which price gains are quelled without sparking a broader downturn in the economy or jobs market.

4. Rivian's annual production guidance misses expectations

Rivian (NASDAQ: RIVN) unveiled Wednesday annual production guidance that fell short of Wall Street estimates at a time of waning U.S. demand for electric vehicles.

For 2024, the electric truck maker said it expects to produce 57,000 vehicles, missing Wall Street expectations of 66,000.

The company is also planning to reduce its salaried workforce by 10% in response to a "challenging macroeconomic environment," according to media reports.

Shares in Rivian fell sharply in after hours trading on Wednesday.

5. Oil ticks higher

Oil prices ticked slightly higher in European trade on Thursday, as bets on tightening global supplies due to disruptions in the Middle East were offset by signs of another outsized build in U.S. inventories.

Crude prices have seen wild swings this week as markets grapple with fears of worsening demand and potential supply disruptions from an ongoing conflict in the Middle East.

Brent oil futures expiring in April had jumped by 0.2% to $83.23 a barrel, while West Texas Intermediate crude futures had risen 0.3% to $77.53 per barrel by 03:12 ET.


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