Tech Stocks Falter as Nvidia Faces Quarterly Results and Dollar Weakens; Walmart and Gold Shine | Daily Market Analysis

Key events:

• USA - FOMC Member Bostic Speaks
• USA - FOMC Member Bowman Speaks
• USA - FOMC Meeting Minutes

On Tuesday, the Dow experienced a decline as investor caution grew regarding Nvidia's upcoming quarterly results and the release of the Federal Reserve's January meeting minutes later in the week.

The Dow Jones Industrial Average dropped by 63 points or 0.2%, the S&P 500 index recorded a 0.6% decrease, and the NASDAQ Composite saw a 0.9% decline.

NVIDIA Corporation (NASDAQ: NVDA) faced a more than 4% decrease, impacting the broader tech sector, as investors approached the chipmaker's quarterly results scheduled for Wednesday.

Anticipating Nvidia's results, some analysts on Wall Street expect the company not only to surpass quarterly estimates but also to provide guidance that exceeds expectations due to increasing demand for AI-led chips.

In contrast, Intel Corporation (NASDAQ: INTC) managed to buck the trend in chip stocks, surging more than 2%. This came after Bloomberg reported last week that the Biden administration is in discussions to grant over $10 billion in subsidies to the semiconductor firm.

Walmart (NYSE: WMT), a major component of the Dow, witnessed a more than 3% increase. The retail giant's fourth-quarter US sales and earnings surpassed estimates, leading to a 9% increase in its annual dividend. Walmart also confirmed its acquisition of smart TV market Vizio for $2.3 billion to enhance its advertising business.

In the retail sector, Home Depot (NYSE: HD) recovered from losses, closing just above the flat line. The home improvement retailer reported a decline in fourth-quarter comparable sales compared to a year ago. This was attributed to cost-conscious shoppers focusing on smaller, more affordable projects rather than major property improvements.
 

The US Dollar experiences continued selling pressure in the Asian session on Wednesday, trading near its lowest level in nearly three weeks, a trend initiated the previous day. The USD Index, which gauges the Greenback against a basket of currencies, hovers below the 104.00 mark as traders eagerly anticipate the release of the FOMC minutes, seeking a fresh directional impetus.

The Australian Dollar seems poised to extend its winning streak for the sixth consecutive session on Monday. Support for the AUD is reinforced after the Reserve Bank of Australia releases its meeting minutes, steering market sentiment toward the probability of no immediate rate cuts. Additionally, the decline in the US Dollar provides further backing for the AUD/USD pair, potentially influenced by weaker US Treasury yields leading up to the Federal Open Market Committee Minutes scheduled for Wednesday.

Despite the positive trend, the Australian Dollar might encounter challenges due to weakened Aussie money markets, coinciding with the S&P/ASX 200 Index's second consecutive session of decline following overnight losses on Wall Street. The dip is attributed to subdued mining stocks and metals prices. Moreover, the Australian Bureau of Statistics released mixed Wage Price Index data for the fourth quarter, showing limited impact on the Aussie Dollar.

In Asian trade on Wednesday, gold prices show an uptick, continuing the recent rebound as the dollar retreats in anticipation of more signals on US interest rates, particularly from the minutes of the Federal Reserve’s late-January meeting. However, the yellow metal remains mostly within a $2,000 to $2,050 an ounce trading range established over the past month. The outlook for gold is obscured by the potential for higher-for-longer US interest rates. All eyes are now on the Fed’s late-January meeting minutes for insights into the possible trajectory of US interest rates.

During the meeting, the central bank maintained rates, downplaying expectations of early interest rate cuts. Subsequent hotter-than-expected US inflation readings led to the market reevaluating the likelihood of early rate cuts, impacting gold prices. Although briefly dipping below $2,000 an ounce in February, the yellow metal staged a robust rebound from two-month lows.

Looking beyond Wednesday’s Fed minutes, the spotlight shifts to speeches from various Fed officials throughout the week, including Raphael Bostic and Michelle Bowman, both key members of the bank’s rate-setting committee.