A look at the day ahead in U.S. and global markets from Mike Dolan
What appeared like a solid earnings beat from AI-bellwether Nvidia failed to impress nervy tech investors, with anxiety about the wider U.S. economy persisting as trade tariff drums keep beating.
As the poster child for the artificial intelligence boom that’s driven Wall Street outperformance over the past two years, the giant chip designer continues to underline the scale of that growth. But after a 3% bounce on Wednesday before the after-hours update, the stock ebbed about 1% overnight.
While Nvidia delivered a 78% surge in quarterly revenue, the end of triple-digit revenue growth in 2025 now seems inevitable. What’s more, it said first-quarter margins would tighten to 71% from 73.5% – lower than Wall Street’s 72.2% estimate – as it ramps up production of new flagship Blackwell AI chips.
The bar to impress is simply sky-high from here after a 1,800% stock price explosion over the past five years. And that’s alongside persistent fears about overspending in the booming industry, along with geopolitical trade and investment curbs and overseas competition add questions going forward.
The underwhelming reception for Nvidia’s latest did little to sooth the ongoing 10%-plus correction in stocks of the once ‘Magnificent Seven’ Big Tech U.S. megacaps since December.
And there are other fish to fry for the broader market as investors now parse signs of a new year slowdown in the U.S. economy, along with another confusing salvo on tariff threats from President Donald Trump late on Wednesday – this time a warning of 25% duties on Europe.
Futures on this year’s underperforming S&P500 index perked up on Thursday nonetheless, trying to claw back the 6,000 handle the index lost earlier in the week. Europe’s high-flying stock benchmarks, meantime, were knocked back about 0.5% from new records by the latest tariff warnings.
But the tariff uncertainty and deep cuts to government workers and programs underway stateside are starting to jangle business and consumer confidence and economic activity.
While likely affected by poor weather, housing is another worry and made for another data miss on Wednesday. Sales of new U.S. single-family homes fell more than expected in January as persistently high mortgage rates sidelined potential buyers.
Thursday’s diary offers another health check on the new year, with durable goods, jobless claims, pending home sales and another business survey due. And a January readout on inflation captured by the personal consumption expenditures basket is now keenly awaited.
But U.S. economic surprise indexes are now at their most negative since September, and first-quarter GDP estimates will be watched closely for any further slowing from Q4’s 2.3% pace – with a revision of the latter due Thursday too.
The bond market senses some trouble, with 10-year Treasury yields sliding to their lowest of the year on Wednesday before steadying and reclaiming 4.3% early today.
Two-year yields hit their lowest since before November’s election on Wednesday but firmed again today to 4.1%.
The swoon in yields, which have lost about a quarter of a percentage point in just two weeks, has been exaggerated in part by nerves about another debt ceiling standoff ahead – which Federal Reserve officials have indicated may pause its ongoing balance sheet runoff of bonds.
However, Fed easing hopes have gone up a notch too this week and futures now see an 80% chance of another rate cut by June.
U.S. crude oil prices also hit a new year low on Wednesday before steadying today. Trump on Wednesday said he was reversing a license given to Chevron to operate in Venezuela by his predecessor Joe Biden more than two years ago.
Thursday’s slight backup in debt yields and the euro’s retreat on Trump’s European tariff sideswipe, bolstered the dollar index. But currency markets have been mostly undecided all week between the influence of trade war fears that lift the greenback and a U.S. slowdown that could drag on it.
Geopolitical worries continued to rumble in the background, with uncertainty about the mooted deal to end the Ukraine war and Chinese military activity around Taiwan into the mix.
Gold prices slipped again, however.
Risk assets more generally – especially those most connected with the tech sector – are on the back foot. Bitcoin plunged deeper below $90,000 on Wednesday to hit its lowest since shortly after the election more than three months ago.
Elsewhere, Asia stocks were more mixed. China’s mainland index eked out a gain, but Hong Kong ended slightly in the red. Japan’s Nikkei recovered a touch from early week losses.
Key developments that should provide more direction to U.S. markets later on Thursday:
* US January durable goods orders and pending home sales, Q4 GDP revision, weekly jobless claims, Kansas City Federal Reserve’s February business surveys; Mexico Jan jobless and trade; Canada Q4 current account balance
* Federal Reserve Board Governor Michelle Bowman, Philadelphia Fed President Patrick Harker, Cleveland Fed chief Beth Hammack, Kansas City Fed boss Jeffrey Schmid, Richmond Fed chief Thomas Barkin and Fed Vice Chair for Supervision Michael Barr all speak
* UK Prime Minister Keir Starmer meets US President Donald Trump in Washington
* US corporate earnings: Dell, HP, Warner Bros Discovery, Edison, Hormel Foods, Autodesk, Evergy, Mosaic, JM Smucker, Norwegian Cruise Line, EOG, Solventum, Teleflex, Viatris, Vistas, Erie Indemnity etc
(By Mike Dolan, editing by XXXX; mike.dolan@thomsonreuters.com)
