A look at the coming day in US and global markets by Mike Dolan
Wall Street is feeling a bit hurt after its worst week in 10 ruined the post-election party, with home truths about interest rates and earnings creeping back in along with all the uncertainty about what a new administration will actually do in January.
Stocks fell on Friday after a week of pesky inflation readings, sizzling retail sector updates and Federal Reserve Chief Jerome Powell’s ambiguity about future easing.
However, there was also concern ahead of chip giant Nvidia’s latest earnings report on Wednesday, as the world’s largest company by market value and leader in artificial intelligence faces another test of the nearly 800% stock market boom during last year.
The $3.5 trillion company is expected to post net income of $18.4 billion as revenue rose more than 80% to $33 billion, according to LSEG data. However, Nvidia’s huge profits over the past year are inevitably becoming more modest.
With reasonable concerns about the prospects of a global trade war in the background, Nvidia shares took a 2% hit early Monday following weekend reports that its new Blackwell AI chips, which have already faced delays , they encountered problems with the accompanying servers and they overheated.
However, stock index futures put on a brave face before today’s open and attempted to recoup some of last week’s plunge, which shaved off nearly 50% of the S&P500’s post-election rally.
The overall earnings season has handily surpassed estimates, with aggregate annual earnings growth close to 9%, up from 5.3% forecast in early October.
However, growth estimates for next year are being cut, with the S&P500’s full-year earnings growth forecasts falling by about a percentage point to 14% in the past two weeks.
Beyond stocks, the restive Treasury market stabilized early Monday, with 10-year yields holding below 4.5%.
Futures prices for another Fed rate cut next month show around a 60% chance of further easing in December and are now pricing in 75 basis points of cuts through the end of next year.
Despite contentious Cabinet picks to date, President-elect Donald Trump has yet to propose names for top economic posts in the Treasury or Commerce departments or for the new Trade Representative.
Trump added former Federal Reserve Governor Kevin Warsh and billionaire Marc Rowan to the list of candidates to become his Treasury secretary, the New York Times and the Wall Street Journal reported Sunday.
Warsh, a former investment banker, served on the Federal Reserve Board from 2006 to 2011 and was seen as a fiscal hawk and advocate for higher savings rates. Rowan co-founded investment manager Apollo Global Management and became its CEO in 2021.