Market Volatility Ahead of Nvidia Earnings
US stocks experienced a rollercoaster ride on Wednesday, recovering from steep losses ahead of Nvidia’s highly anticipated earnings report. The Dow Jones Industrial Average finished the day up about 0.3%, while the S&P 500 closed flat, and the tech-heavy Nasdaq Composite slipped about 0.1%. All three major indexes had been deep in the red at some point during the day, with the Nasdaq down over 1% in morning trading.
Nvidia Earnings: A Crucial Litmus Test
After the bell, Nvidia reported earnings per share (EPS) of $0.81 on revenue of $35.1 billion, surpassing Wall Street’s expectations. Analysts were anticipating EPS of $0.74 on revenue of $33.2 billion. However, shares slipped early in after-hours trading. The $3.61 trillion chipmaker, now the world’s most valuable company, had seen its stock surge 200% this year so far, hitting record highs after the US presidential election.
Target Struggles with Earnings Miss
Meanwhile, Target muted its outlook for holiday-season sales and profit after posting a big quarterly profit miss and slashing its full-year guidance. The retail giant’s shares sank more than 21% after the earnings report. This marks the stock’s worst one-day performance since May 2022.
Homebuilder Stocks Lose Steam
Homebuilder stocks have been losing steam, with the SPDR S&P Homebuilders ETF (XHB) falling nearly 5% in the past month. DR Horton (DHI), the biggest US homebuilder, along with Lennar (LEN) and PulteGroup (PHM), have seen declines of more than 12%, 6%, and 11% in the past month, respectively. According to Wedbush analyst Jay McCanless, the decline is not surprising, given the recent increase in mortgage rates.
Qualcomm’s Diversification Efforts
Shares of Qualcomm (QCOM) dropped 6.6% following its investor day, which focused on diversifying revenue beyond its smartphone chips. The company expects to generate $22 billion in sales of semiconductors by 2029, with a focus on personal computers, autos, and advanced systems.
AI Boom: Looking Beyond Nvidia
Goldman Sachs chief US equity strategist David Kostin believes that investors should look beyond Nvidia to benefit from the AI boom. Kostin suggests that companies in the “AI enabled revenue” group, such as Uber (UBER), Adobe (ADBE), Mastercard (MA), and Salesforce (CRM), could benefit from not having to spend as much on expensive AI hardware while still reaping the benefits of AI.
Bitcoin Soars to Record Highs
Bitcoin (BTC-USD) prices surged more than 3% to hit a fresh record near $94,500 per token before paring back some gains and falling below $94,000. Optimism for a crypto-friendly Trump White House has spurred the digital currency’s recent rally. Galaxy Digital CEO Mike Novogratz believes that the new administration will be more supportive of crypto, which could help US crypto businesses operate without the “fear of litigation.”
Federal Reserve Governor Expresses Concern
Federal Reserve governor Michelle Bowman expressed concern that the Fed’s progress toward 2% inflation has “stalled” and the central bank should proceed “cautiously” when lowering interest rates. Bowman argued that there are “greater risks to the price stability side of our mandate, especially while the labor market remains near full employment.”
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