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Nasdaq 100 futures climbed significantly by 0.9% on Thursday, buoyed by Nvidia’s robust first-quarter performance, which underscored strong demand for AI technology. S&P 500 futures also saw an uptick of 0.5%, while Dow futures modestly increased by 0.1%. Nvidia’s earnings triumph, highlighted by a 6% rally in extended trading and an announced 10-for-1 stock split, provided a stark contrast to the general market downturn noted in Wednesday’s session where major indices retreated amidst growing concerns over inflation and monetary policy.

Corporate Earnings and Sectoral Performance:

• Nvidia’s Earnings: Nvidia outstripped expectations with higher earnings and revenue, sparking optimism in the technology sector, particularly around AI chip demand.
• Market Retreat: In the previous session, the Dow dropped 0.51%, the S&P 500 slid 0.27%, and the Nasdaq Composite fell 0.18%, with energy, utilities, and materials sectors leading the declines.
• Corporate News Impact: Target’s shares plummeted by 8% due to disappointing earnings reports. Meanwhile, Lululemon faced a 7.2% drop after its Chief Product Officer stepped down, signaling potential turbulence in the company’s leadership.

Federal Reserve and Economic Indicators:
The latest Federal Open Market Committee (FOMC) minutes unveiled a hawkish outlook, with Fed officials expressing heightened concern over persistent inflation and the possibility of further tightening monetary policy if conditions worsen. This stance has influenced the dollar index to stabilize at 104.9, maintaining gains fueled by these policy concerns.

Interest Rates and Treasury Yields:

• Fed’s Hawkish Tone: The revelation of a more cautious approach to rate cuts, as discussed in the FOMC minutes, dampened some expectations for easing monetary policy. Current market odds for September and November rate cuts have adjusted to around 61% and 72%, respectively.
• Bond Market Reaction: The US 10-year Treasury note yield sustained a slight increase at 4.43%, reflecting the market’s recalibration of rate cut expectations following the Fed’s hawkish disclosures.

2 Days Ago

Upcoming Economic Data:
Investors are bracing for the upcoming release of U.S. weekly jobless claims and preliminary PMI figures for May, which will offer additional insights into the labor market and broader economic trends. These indicators are crucial for gauging the potential direction of Federal Reserve policies in the coming months.

Currency and Global Economic Outlook:
The dollar’s strength was notably resilient against major currencies but saw some pullback against the Australian and New Zealand dollars. Notably, the sterling gained against the dollar following the UK’s hotter-than-expected inflation data, which may influence the Bank of England’s policy decisions moving forward.

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