Nvidia spark does not jump
Inflation concerns slow US stock markets
23.05.2024, 23:52
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Nvidia shares are currently making US investors cheer. However, the mood remains depressed due to the current Fed minutes. So far, there are no signs of interest rate cuts. This is having an impact on the overall market.
Inflation concerns have slowed down the US stock markets. The prospect of a sustained boom in artificial intelligence (AI) made investors cheer at chip manufacturer Nvidia. But the spark did not spread to the market as a whole. Dow Jones Index of the standard values closed 1.5 percent lower at 39,065 points. The broader S&P 500 Index lost 0.7 percent to 5267 points and the index of the technology stock exchange Nasdaq 0.4 percent to 16,736 positions.
Nvidia shares were on a high, breaking the $1,000 mark for the first time and closing 9.3 percent higher at $1,037. Nvidia expects sales of around $28 billion in the current quarter, almost $1.4 billion more than analysts expected on average. This strengthened investors’ hopes of a sustained boom in the artificial intelligence (AI) industry. “At the beginning, people were very nervous about whether Nvidia could continue to exceed rising expectations, but it did. (…) But I’m worried that this will fizzle out after a while,” said Brian Jacobsen, chief economist at Annex Wealth Management.
The minutes of the latest meeting of the US Federal Reserve dampened hopes of an imminent US interest rate cut. Inflation is declining more slowly than central bankers expected. “An interesting finding from the last 24 hours is that central banks are still unsure how to shape their policies and how high interest rates need to be in order to contain inflation,” commented Kyle Rodda, analyst at the trading platform Capital.com.
Interest rate turnaround soon?
The probability of a Fed rate hike at its meetings in September and November is still estimated at around 60 and 70 percent on the futures markets, respectively. Some analysts say the first rate cut could not come until 2025. Accelerated economic activity and strong signals from the US labor market also raised doubts on Thursday. “If we see an acceleration in economic growth, it means that the Fed could sit back and do nothing for longer than expected. That has taken the wind out of the markets’ sails a little at the moment,” said economist Jacobsen.
Live Nation shares fell, losing 7.8 percent. The Justice Department, 30 states and others filed a lawsuit in New York against the concert promoter and its subsidiary Ticketmaster for illegally driving up the prices of concert tickets and thereby harming artists. The aim is to split up the company, which has hundreds of well-known artists under contract, owns concert halls and controls large parts of the concert ticket market through Ticketmaster. Boeing fell 7.6 percent. Chief Financial Officer Brian West prepared investors for the fact that the aircraft manufacturer, which is in crisis, will burn money rather than generate it in 2024. He expects negative free cash flow for the year as a whole, West said at an industry conference.
Deliveries are not expected to increase in the second quarter. Deliveries to China have also been delayed in recent weeks. Tesla’s sales fell by 3.5 percent. The electric car manufacturer is quietly abandoning its goal of selling as many cars as Volkswagen and Toyota combined. The announcement to increase sales to 20 million cars per year by 2030 no longer appears in the annual sustainability report. Tesla boss Elon Musk made this goal public in 2020.
You can find out more about today’s stock market events here.