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US futures fall as the wait for Nvidia’s earnings comes to an end

U.S. stocks fell from record highs on Wednesday as investors awaited crucial earnings from AI whistleblower Nvidia ( NVDA ) and more clues to the Federal Reserve’s thoughts on rate cuts.

S&P 500 futures (ES=F) fell about 0.1% to hit a new record high. Dow Jones Industrial Average futures (YM=F) also fell 0.1%, while contracts on the tech-heavy Nasdaq 100 (NQ=F) flatlined.

Shares managed to hit new all-time highs this week as markets waited to find out whether Nvidia will deliver on sky-high earnings expectations. Investors are bracing for a big move in the chipmaker’s stock price and other potential AI plays after its first-quarter results, which will be announced after the bell. It all adds up to a big test for the broader market as a whole.

Investors also get a second reality check in the form of minutes from the Fed’s latest meeting. Eyes are on any deviation from policymakers’ repeated message that they want to be more confident of a cooling of inflation before they start cutting rates. But ahead of the release later Wednesday, some nerves were frayed by British inflation data that suggested price pressures elsewhere are proving difficult to tamp down.

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Read more: What influence does the labor market have on inflation?

At the same time, Target’s (TGT) quarterly results fueled concerns about the state of the economy. The retail giant’s revenues lagged as consumers refrained from non-essential purchases, citing inflation. Shares fell 8% in pre-market trading.

Live2 updates

  • And we’re back to Nvidia

    It’s almost showtime for Nvidia (NVDA), with earnings reports after today’s close.

    The markets could go wild for 48 hours because of this one stock.

    Current premiums in the options markets imply traders are bracing for an 8.6% swing in the share price in either direction, the FT reported this morning.

    If Nvidia reacts negatively to its results and guidance, it will be difficult to shake the bull case for its most exposed stocks.

    “Even if there is short-term weakness due to an unforeseen force, we see limited equity weakness as investors look to maintain or add to their positions for Blackwell’s second half. [new AI chip] growth,” Piper Sandler semi-analyst Harsh Kumar said in a note this morning.

    Game on.

    Yahoo Finance technology editor Dan Howley previews Nvidia’s results here.

  • Goldman is keeping it real when it comes to government debt

    Goldman Sachs just presented a new study that will likely be eaten up by politicians who love to talk about the country’s rising debt burden.

    The bank’s economic team has raised the debt-to-GDP ratio to 130% by 2034, up from 97% in projections published in 2019.

    “The outlook for U.S. fiscal sustainability has become more challenging over the past five years. The primary deficit – the deficit excluding interest costs on the debt – remains roughly 5% of GDP larger than it has historically been at full employment, the debt burden -The GDP ratio has increased by 19 percentage points to 98% and is likely to rise soon surpassing post-World War II highs, and interest rates on new government bonds have roughly doubled. In particular, higher expected future interest rates have significantly worsened the trajectory of the debt-to-GDP ratio and of real interest expense as a percentage of GDP,” said Jan Hatzius, chief economist at Goldman Sachs.

    The unsavory graph is below.

    Goldman Sachs sees a higher path for the country's already bloated debt position. Goldman Sachs sees a higher path for the country's already bloated debt position.

    Goldman Sachs sees a higher path for the country’s already bloated debt position. (Goldman Sachs)

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