US stock indices are barely higher on Monday, with sentiment somewhat guardedly optimistic as more signals about interest rates and earnings are expected this week.
More signals from the Fed and PMI data are expected this week
This week, the focus will be on further signals from the Federal Reserve about the future of interest rates, as the Fed’s meeting minutes from late April will be released on Wednesday.
At that meeting, Fed policymakers kept rates unchanged and additionally signaled that more confidence was needed that inflation was falling in the country. However, Fed Chairman Jerome Powell had also mentioned that he expected rates to come down by 2024.
Importantly, several Fed officials will also have their say this week, particularly with members of the Fed’s rate-setting committee.
The Fed’s signals come amid increased attention to the bank’s rate-cutting goals, particularly after slightly softer inflation readings for April prompted hopes for a September rate cut.
Beyond the interest rate data, markets are also awaiting purchasing managers’ index data for May, which will provide further signals about US business activity. Any signs of cooling could influence interest rate cut estimates.
Wall Street may stabilize after reaching all-time highs
Wall Street indices made new highs last week, but lost momentum amid uncertainty about when the Federal Reserve will begin cutting interest rates.
Excessive valuations, especially in the technology sector, and cooling enthusiasm for artificial intelligence also restrained index growth.
Nvidia’s quarterly reports are being released this week
Attention this week has also been focused on quarterly reports from Nvidia (NASDAQ:NVDA), the darling of artificial intelligence, to see if it can demonstrate the sharp rise in its share price over the past year.
According to Reuters estimates, Nvidia is expected to post a substantial increase in earnings, with revenue of $24.8bn, up from $7.2bn a year earlier, and a per-share return of $5.57, up from $1.09 a year earlier.
It is also estimated that Nvidia’s earnings are likely to set the tone for other technology stocks, due to its growing exposure to artificial intelligence.
In the rest of the market, stocks of JPMorgan Chase (JPM) rose 0.3% as the investment bank upgraded its estimate of net interest income, the difference between the profit it makes on loans and what it earns on deposits.
Johnson Controls (JCI) stocks gained 3.8% after Bloomberg reported that activist investor Elliott Investment Management had built a more than $1 billion position in the building solutions maker.
Paramount Global (PARA) gained 1% after the New York Times reported that Sony and Apollo Global Management (APO) have entered into confidentiality agreements to examine Paramount Global’s balance sheets with a view to a possible bid for its stocks.
