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Briefing.com Summary:
*NVIDIA had another great report, but its stock is down in pre-market trading.
*Walmart sounded some concern about consumer spending activity in providing a disappointing Q2 outlook.
*Jobless claims continue to point to a low firing, low hiring environment.
The corporate news last night couldn't have gotten any bigger—literally. NVIDIA (NVDA), with a $5.45 trillion market capitalization, reported its fiscal Q1 results shortly before it was revealed that SpaceX had filed its IPO prospectus, and reports suggested OpenAI may soon be next.
Per usual, NVIDIA's report was an embarrassment of riches that featured an 85.2% year-over-year increase in revenues to $81.6 billion, an $80 billion increase to its share repurchase program, and an increase in its quarterly dividend to $0.25 per share from $0.01 per share.
The only thing that hasn't increased, it seems, is NVIDIA's stock price. It is down 0.8% in pre-market action. Clearly, that isn't a material move, but it registers as a halting move for market participants, who are also starting this morning at rising oil prices (WTI +2.8% to $100.96) and rising bond yields (10-yr +5 bps to 4.62%), which are moving in response to Iran's Supreme Leader saying, according to Reuters, that Iran's enriched uranium needs to stay in Iran. Fox News reports that the White House is pushing back on the veracity of that report.
In any case, the move in NVIDIA, oil, and bond yields has been the primary driver of the equity futures market, which is also digesting the weakness in Walmart (WMT), Intuit (INTU), and Deere & Co (DE) after their earnings results.
Walmart, for its part, issued disappointing Q2 guidance tied to misgivings about consumer spending in the face of high gas prices and waning tax refunds; Intuit confirmed it will be cutting 17% of its global workforce; and Deere said it expects FY26 net income of $4.5 billion to $5.0 billion, unchanged from its prior guidance, as its customers "face ongoing challenges."
The challenge for the stock market today will be to regroup after an expected slide at the open.
Currently, the S&P 500 futures are down 26 points and are trading 0.4% below fair value, the Nasdaq 100 futures are down 160 points and are trading 0.5% below fair value, and the Dow Jones Industrial Average futures are down 117 points and are trading 0.2% below fair value.
The economic data released at 8:30 a.m. ET didn't turn the tide for the equity futures market either. It was a mixed bag.
- Initial jobless claims for the week ending May 16 decreased by 3,000 to 209,000 (Briefing.com consensus: 210,000), while continuing jobless claims for the week ending May 9 were unchanged from the prior week at 1.782 million.
- The key takeaway from the report is that there is nothing to see here, meaning there is nothing in these latest numbers that would suggest there has been a sea change in a labor market environment that remains characterized by low firing and low hiring activity.
- Housing starts decreased 2.8% month-over-month in April to a seasonally adjusted annual rate of 1.465 million units (Briefing.com consensus: 1.420 million). Building permits rose 5.8% month-over-month to a seasonally adjusted annual rate of 1.442 million (Briefing.com consensus: 1.380 million).
- The key takeaway from the report is that there was broad-based weakness across all regions for both single-family starts and single-family building permits, underscoring the headwind posed for builders by rising costs for financing, materials, and labor.
- The Philadelphia Fed Index fell from 26.7 in April to -0.4 in May (Briefing.com consensus: 15.5). The dividing line between expansion and contraction for this survey is 0.0, so the May result reflects a slight contraction in activity versus April.
- The key takeaway from the report, though, is that the diffusion index for future general activity climbed 12 points to 53.2, which is the highest reading since June 2021 and a sign that manufacturers are expecting better activity to follow in the next six months.
