A look at the day ahead in the US and global markets by Mike Dolan
Wall Street is feeling a little bruised after the worst week in 10 spoiled the post-election party, with domestic truths about interest rates and profits trickling 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 nasty inflation data, sharp retail updates and Fed boss Jerome Powell’s equivocation on future easing.
However, there was also some concern ahead of chip giant Nvidia’s latest earnings report on Wednesday – as the world’s largest company by market value and artificial intelligence faces another test of its nearly 800% share growth over the past year .
According to LSEG data, the $3.5 trillion company is expected to post a net profit of $18.4 billion as revenue soars more than 80% to $33 billion. However, Nvidia’s huge profit figures over the past year are inevitably becoming more modest.
With reasonable concerns about the chances of a global trade war in the background, Nvidia shares fell 2% early Monday after reports over the weekend that its new Blackwell AI chips, which had already been delayed, were experiencing problems with associated servers that overheated.
Still, stock index futures were braver ahead of today’s open, trying to regain some of last week’s swoon, which knocked off nearly 50% of the S&P500’s post-election rally.
The broader earnings season has easily exceeded expectations, with total annual earnings growth nearing 9%, up from the forecast of 5.3% in early October.
However, growth expectations for next year are being revised downwards, with the S&P500’s full-year earnings growth outlook falling by about one percentage point to 14% over the past two weeks.
Beyond stocks, the troubled government bond market remained steady on Monday, with 10-year yields remaining below 4.5%.
Futures prices for another Fed rate cut next month show a roughly 60% chance of further easing in December, and the 75 basis point cuts are now priced through the end of next year.
Despite controversial Cabinet choices so far, President-elect Donald Trump has still not proposed names for the top economic posts at the Treasury or Commerce Departments, or for the new trade representative.
Trump has added former Fed Governor Kevin Warsh and billionaire Marc Rowan to the list of candidates to become his Treasury secretary, the New York Times and Wall Street Journal reported on Sunday.
A former investment banker, Warsh served on the Fed board from 2006 to 2011 and was seen as both a budget hawk and a proponent of higher savings rates. Rowan co-founded investment manager Apollo Global Management and became CEO in 2021.
