NVIDIA results and guidance not enough for investors

General market commentary

Wall Street remained subdued on Wednesday, weighed down by mixed corporate updates and cautious sentiment. Nvidia's results, though exceeding earnings and revenue expectations, left investors lukewarm due to softer-than-expected revenue guidance and a slight decline in gross margin outlook. Shares of Nvidia initially dropped 3% in after-hours trading before fluctuating amid volatility. Meanwhile, Target's disappointing earnings and outlook sent shockwaves through the retail sector, signalling restrained discretionary spending among consumers and raising concerns ahead of the festive season. The S&P 500 ended flat, the Dow Jones Industrial Average edged up 0.32%, and the Nasdaq Composite dipped 0.11%, reflecting the market's cautious tone. Treasury yields rose slightly, with the 10-year note yield reaching 4.41%, while the VIX climbed to 17.26, indicating heightened investor uncertainty.

From a technical perspective, the major indices showed resilience despite early weakness, with the S&P 500 holding near key support levels at 5,900 and the Dow remaining above the psychologically significant 43,400 mark, suggesting underlying bullish momentum. However, the Nasdaq’s dip underscores vulnerability in tech-heavy equities, particularly as Nvidia's post-earnings volatility weighed on sentiment. The VIX's rise to 17.26 points to growing market jitters, possibly signalling resistance for equities ahead. Additionally, the 10-year Treasury yield at 4.41% may continue to temper risk appetite, with traders closely monitoring these levels for directional cues.

Latest market update

U.S. equity index futures were largely flat this morning, with cautious sentiment following Nvidia's mixed earnings report and weak results from Target.

Asian markets mostly fell on Thursday, led by weakness in tech shares after Nvidia's mixed guidance sparked concerns about AI demand, while Indian equities tumbled on fresh U.S. corruption allegations against the Adani Group. Japan’s Nikkei and Taiwan’s TSMC shares declined, while South Korea’s KOSPI posted modest gains, supported by Nvidia suppliers.

European shares fell yesterday, with the Stoxx 50 down 0.4% to 4,734, as rising tensions between Russia and Ukraine dampened risk sentiment. Banks and automakers led the losses, including Santander, BNP Paribas, Mercedes-Benz, and Volkswagen, while ASML dropped ahead of Nvidia’s earnings report.

The dollar index remained strong above 106.5, supported by inflation concerns under the incoming Trump administration and safe-haven demand amid rising geopolitical tensions. The euro weakened to 1.0548 as the dollar strengthened across major currencies ahead of key U.S. economic data and Federal Reserve commentary.

Oil prices rose slightly this morning, supported by geopolitical tensions between Russia and Ukraine, though a larger-than-expected increase in U.S. crude inventories capped gains. Ongoing concerns over potential attacks on Russian energy infrastructure and weaker global oil demand have added uncertainty to the market.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Nvidia's fiscal third-quarter results exceeded expectations, but its cautious guidance for the upcoming quarter, likely influenced by the transition to new Blackwell chips, led to a drop in shares. Despite strong earnings and revenue, market sentiment remained mixed due to concerns over supply constraints and the development of the Blackwell AI chips.

Palo Alto Networks reported after hours, surpassing Wall Street's earnings per share estimates and meeting revenue expectations. Despite this, shares dropped almost 5% in post-market trading, likely due to disappointment that its guidance was only in line with forecasts rather than exceeding them.

Snowflake raised its 2025 product revenue forecast to $3.43 billion, driven by strong demand for its data cloud and analytics platform, particularly for AI-powered tools. Shares surged 20% after the company reported better-than-expected third-quarter earnings and announced a strategic AI partnership with Anthropic.

Target shares plunged 21% after missing revenue and earnings expectations and issuing weak fourth-quarter guidance, driven by softer demand for discretionary goods. Meanwhile, Walmart appears to be capturing market share with its appeal to higher-income shoppers.

Starbucks is exploring options for its China business, including a potential stake sale or local partnership, as it seeks to revive sales and investor confidence under new CEO Brian Niccol. The company has faced growing competition from local rival Luckin Coffee and struggles with declining sales in the U.S. and unionisation efforts.

Comcast announced plans to spin off the majority of its NBCUniversal cable TV networks, including MSNBC and CNBC, as it shifts focus to streaming growth. The new company, which will retain $7 billion in annual revenue from cable channels, is expected to attract potential buyers, including private equity firms.

Delta Air Lines projects a 10% annual growth in per-share profit, aiming for $8.65 by 2027, driven by rising premium travel demand and operational efficiency. The airline also expects significant growth in non-ticket revenue, with premium offerings making up over 60% of sales by 2027.

STMicroelectronics pushed back its long-term financial targets to 2030, citing ongoing downturns in automotive and industrial markets, with expectations of a recovery in 2025. Despite this, the company remains optimistic about its role in the AI boom and energy-efficient semiconductor market.

MicroStrategy plans to raise $2.6 billion through a private offering of convertible senior notes to acquire more Bitcoin, following its recent purchase of 52,000 bitcoins valued at $4.6 billion. The company's bold strategy of using Bitcoin as a treasury reserve has helped its shares outperform many large U.S. companies in recent years.

Elf Beauty saw its shares drop 10% initially but eventually recovered most of the losses after Muddy Waters took a short position, alleging the company overstated its revenue by up to $190 million over the past three years. The hedge fund also claimed Elf had inflated its inventory figures to mask poor sales.

Netflix's price target for 2025 was raised to $1,100 by Pivotal Research, following the success of its live-streamed Tyson/Paul fight and its potential for future live events. The firm also increased its subscriber and revenue forecasts, highlighting Netflix's strong content and growing value proposition.

Upcoming data and events

The day ahead features key economic data, including initial jobless claims, October existing home sales, and the November Philadelphia Fed Index, offering insight into labour, housing, and industrial trends. Earnings from Deere are also due, while market attention will remain on signals about inflation and rate expectations ahead of next week's holiday-packed calendar of economic releases.

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