Wall Street is flat in pre-market trading with very low volatility as traders retreat to the sidelines ahead of Nvidia's results and speeches from a number of Federal Reserve policymakers. Today is also set to be a quiet day in terms of earnings reports and economic data. Yesterday saw the lowest trading volume this year and there is even less volume in pre-market US trading today.
Palo Alto Networks was the biggest loser in pre-market New York trading, falling as much as 8.5% after the security software company released a disappointing revenue forecast for the quarter. The Dow Jones, S&P 500 and Nasdaq 100 remained largely unchanged, while shares in Europe and Asia fell – Chinese and Hong Kong shares in particular saw significant profit-taking after recent gains.
Investors are mainly waiting for the results of artificial intelligence market leader Nvidia, which has accounted for much of the recent gains in the S&P 500. Nvidia shares also rose 2.5% yesterday, leading to a record close for the Nasdaq 100. Analysts remain bullish on Nvidia and believe that the company's revenue increased 243% last quarter – however, much of the enthusiasm is already priced in as Nvidia is up 91% (!) in the last year.
We are seeing a little more volatility in commodity prices. Gold, silver and copper reached new all-time highs yesterday. The rise in commodity prices has so far not changed the belief that inflation will continue to weaken and that the US Federal Reserve and other major central banks will be able to cut interest rates this year. Oil prices have fallen today, which has eased some of the potential inflation concerns.
We are cautiously optimistic but see limited or almost no upside for today and tomorrow as global equity prices are near record highs. Ahead of Nvidia's earnings report on Wednesday (after market close), there is no catalyst that could lead to a strong rally. Most analysts are also optimistic, although the rather pessimistic comments from JPMorgan CEO Jamie Dimon weighed heavily on risk sentiment yesterday. JPMorgan's Kolanovic is the last prominent bear after Morgan Stanley's Mike Wilson yesterday reversed his bearish outlook to slight gains by the end of 2025.
The day will also see speeches from central bank officials, including Fed Governor Christopher Waller, but overall, as mentioned, it's another quiet day with little in the way of key data to move global markets, risk sentiment or Wall Street.
Bonds and the USD are also little changed. Crypto prices rose (to overbought conditions) on signs of momentum towards US approval of ETFs that invest directly in the second largest token Ether.
👁 ROB'S MARKET OVERVIEW:
May 21, 2024
🌐/🇺🇸 Global Markets ↘️/➡️ (rising caution / mostly sideways movement)
Cyclical / Luxury Stocks ↘️/➡️
Tech/Growth Stocks ↕️ (with high importance what Nvidia does)
Financial Stocks ➡️
Defensive Stocks ➡️/↗️ (rotation into more defensive stocks)
Energy Stocks ↘️/➡️ (slight headwinds due to lower oil prices, but energy remaining oversold)
Materials Stocks ↗️/➡️
💱 Forex (low volatility)
AUD ↗️/➡️ (slight rebound after yesterday's selling, but headwinds due to cautious mood)
USD ↘️/➡️/↗️
EUR, GBP, CHF, JPY ➡️
CAD ↘️/➡️ (headwinds from weaker oil prices, lower than expected inflation in Canada)
⚒ Commodity Markets ↘️/↕️
Oil prices ↘️/➡️
Natural Gas prices ↘️/↕️
Metal prices ↘️/➡️
Gold /↘️/↕️/↗️ (early headwinds but benefiting from cautious mood / general bullish outlook)
⚡️Cryptos ↕️ (volatile after yesterday's strong gains; will continue to hover near $70.000 and see some rapid profit taking and gains)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
Your Robert
