Jen-Hsun Huang, president and chief executive officer of Nvidia Corp., speaks during the company’s event at Mobile World Congress Americas in Los Angeles, California, Oct. 21, 2019.
Patrick T. Fallon | Bloomberg | Getty Images
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Nvidia’s revenue tripled
Nvidia’s fiscal third-quarter revenue grew 206% year on year to $18.12 billion, handily beating expectations, and net income rocketed from $680 million to $9.24 billion. Moreover, Nvidia expects revenue for the current quarter to increase to $20 billion, an implied 231% growth. But Nvidia finance chief Colette Kress warned exports restrictions will cause sales to China to “decline significantly.”
No mention of cuts
Federal Reserve officials think monetary policy must “be kept sufficiently restrictive,” and made no mention of rate cuts, according to minutes of the Fed meeting from Oct. 31 to Nov. 1. Fed officials also project economic growth in the fourth quarter to “slow markedly” from last quarter’s 4.9% increase in gross domestic product.
Streak broken
U.S. stocks fell Tuesday, snapping major indexes’ winning streaks, as investors digested the Fed minutes. The pan-European Stoxx 600 index slipped 0.09%. Auto stocks fell 1.6% despite new car registrations in the European Union rising 14.6% year on year in October, for its 15th consecutive month of growth, according to the European Automobile Manufacturers’ Association.
Binance’s CZ pleads guilty
Binance CEO Changpeng Zhao will step down from his role and plead guilty to criminal charges as part of a $4.3 billion settlement with the U.S. Department of Justice, according to court documents. Richard Teng, the company’s former global head of regional markets, will be Binance’s new CEO, said Zhao in a post on X, formerly known as Twitter.
[PRO] ‘Stock picker’s paradise’
Stocks are enjoying a strong November, and analysts are predicting a “Santa rally” could carry the market higher as the year draws to a close. The Bank of America is going one step further and thinks the S&P 500 could sustain its momentum until the end of 2024, hitting a peak of 5,000. It would be a “stock picker’s paradise,” the BAC strategist said.
Minutes of the Federal Reserve’s meeting gave no indication of a rate cut, putting the brakes on stocks’ November rally. And though Nvidia’s third-quarter earnings astounded, it might not be enough to restart the momentum in markets.
On the surface, nothing about the Fed minutes surprised. The summary reiterated what Chair Jerome Powell has been so careful to emphasize: that “the stance of monetary policy be kept sufficiently restrictive to return inflation to the Committee’s 2 percent objective over time.”
Instead, investors were let down by what wasn’t present. “The minutes gave no indication that members even discussed when they might start lowering rates,” CNBC’s Jeff Cox noted.
Markets, disappointed by the minutes, fell. The Dow Jones Industrial Average slipped 0.18%, the S&P 500 declined 0.2% and the Nasdaq Composite dropped 0.59%. Their losses yesterday meant the S&P and Nasdaq snapped their five-session winning streak.
“If nothing else, the Fed has regained the respect of markets, which it had lost in spectacular fashion by misreading inflation in 2021,” said Jamie Cox, managing partner for Harris Financial Group.
“Forward guidance, Fed minutes, and all other forms of the Federal Reserve communication strategy now has the credibility to manage market expectations again.” Jamie Cox added.
Even Nvidia’s earnings, which came out after the bell, might not lift markets. Yes, the chipmaker’s revenue increased an astounding 300% from a year earlier. But shares of Nvidia ticked down around 1% in extended trading. And recall how Nvidia shares were flat in August even after the chipmaker reported an incredible second-quarter earnings beat.
“It’s a great quarter” for Nvidia, trader Guy Adami said Tuesday on CNBC’s “Fast Money.” “But at what point do you say to yourself, you know what, now the valuation is starting to get a little bit stretched.”
It’s a good thing, then, that the U.S. market has a holiday-shortened week, with markets closed Thursday — time for investors to pause and take stock of things.
