Month: May 2023

(C) Reuters.

Investing.com — Nvidia’s (NASDAQ:NVDA) valuation rose above $1 trillion after the stock jumped by more than 4% on Tuesday, as a frenzy for artificial intelligence has powered a fresh surge in the chipmaking giant.

The move makes California-based Nvidia only the ninth company to ever top the trillion-dollar mark.

Shares were given a further boost on Monday after Chief Executive Jensen Huang unveiled a new supercomputing platform in a bid to take advantage of a recent scramble to harness AI technology. In a speech in Taiwan, Huang said that a “tipping point” had been reached in computing that will allow “everyone” to become a programmer.

The remarks came after a sharp increase in Nvidia shares over the past week made the firm the world’s most valuable semiconductor manufacturer.

The rally was driven in part by a full-year forecast that blew past expectations, which Nvidia said was thanks to rapidly increasing interest in AI development.

(C) Reuters.

Investing.com — U.S. stocks were mixed after a tentative deal to raise the debt ceiling and a surge for Nvidia helped lift tech stocks.

At 10:31 ET (14:31 GMT), the Dow Jones Industrial Average fell 124 points or 0.4%, while the S&P 500 was up 0.1% and the NASDAQ Composite was up 0.5%.

Lawmakers were racing to finalize the debt ceiling deal, which includes limits on the growth of nondefense spending and the reclaiming of unused funds allocated to combat COVID-19. Congress has until early June to raise or suspend the limit – which the agreement will do until early 2025 – or the government risks defaulting on its debt payments.

The deal is not winning over everyone, however, setting up for a fight in the House this week. Some Republican members say they won’t support it because it doesn’t cut enough. Some Democrats have expressed reservations about provisions such as new work requirements to receive certain food assistance and other benefits.

The CB consumer confidence reading came in at 102.3, stronger than the expected 99 for May.

Shares of chip maker NVIDIA Corporation (NASDAQ:NVDA) jumped 4.8% after it unveiled a new set of products around artificial intelligence, including a new AI supercomputer to help meet demand from customers. Its stock valuation has reached $1 trillion, soaring since last week, when it predicted a huge surge in revenue from AI-related business.

Tesla (NASDAQ:TSLA) shares were up 3.5% as CEO Elon Musk visits China for the first time in three years, meeting with the foreign minister on Tuesday.

The Transportation Security Administration said it screened 9.8 million people traveling through airports from Friday through Monday, beating the holiday weekend from 2019, before the pandemic. Shares of American Airlines Group (NASDAQ:AAL) rose 1.4%, while shares of United Airlines Holdings Inc (NASDAQ:UAL) rose 1.4% and Southwest Airlines Company (NYSE:LUV) shares rose 1%.

It’s a big week for job market data, with the job openings report coming out on Wednesday and the government’s comprehensive report on employment for May expected out Friday morning.

The Federal Reserve will be studying the data as it prepares to meet next month to decide the next move on interest rates. Futures traders are putting a 65% probability on the Fed raising rates another quarter of a percentage point in June.

Oil was falling. Crude Oil WTI Futures were down 3.7% to $69.94 a barrel, while Brent Oil Futures were down 3.8% to $74.19 a barrel. Gold Futures were up 0.7% to $1,977.

(C) Reuters.

Investing.com — The Dow ends lower after giving up gains Tuesday, as the rally in semiconductor stocks cooled and investors mulled over the prospect of Congress passing the debt ceiling bill before the June 5 deadline to avoid a default.

The S&P 500 ended flat, the Dow Jones Industrial Average fell 0.2%, or 50 points lower, and the Nasdaq rose 0.3%.

The debt ceiling bill — will first have to clear The House of Representatives Rules Committee Tuesday before proceeding to voting in the House on Wednesday and Senate later this week — will require votes from both sides of the political aisle to pass into law before June 5, when the Treasury has warned the U.S. would run out of money.

The debt-ceiling bill, or “Fiscal Responsibility Act,” which would suspend the debt limit until 2025, is expected to pass before the deadline.

“Now that a deal has been reached, it seems very likely to pass both chambers of Congress in the coming week,” Goldman Sachs said in a note.

Beyond Capitol Hill, a slump in consumer staples and energy was a drag on the broader market, with the latter pressured by plummeting oil prices amid uncertainty about potential output at the upcoming OPEC+ June 4 meeting.

EQT Corporation (NYSE:EQT), APA Corporation (NASDAQ:APA), and Devon Energy Corporation (NYSE:DVN) were among the biggest decliners in energy on the day.

Tech stocks lost some shine after chip stocks gave up intraday gains despite NVIDIA Corporation’s (NASDAQ:NVDA) latest surge briefly pushing the chipmaker’s market cap above $1 trillion for the first time ever.

AI-related names including C3 Ai Inc (NYSE:AI), Palantir Technologies Inc (NYSE:PLTR), and Uipath Inc (NYSE:PATH) were also in the ascendency.

Consumer discretionary, meanwhile, was boosted by a more than 4% rise in Tesla (NASDAQ:TSLA) as the electric vehicle maker’s chief executive Elon Musk arrived in China, which is a key region for the company amid growing domestic competition

“Playing nice in the sandbox in Beijing is something the Street is laser focused on to make sure there are no disruptions to Tesla’s expansion and tentacles within China for the coming years as this remains the #1 EV market in the world,” Wedbush said in a note.

On the economic front, data showing consumer confidence in May topped economists’ forecast, underpinned ongoing bets for another Federal Reserve rate hike next month.

“The confidence data suggests that the risks are tilting toward another Fed rate hike in June, and at a minimum, a continued push forward with hawkish policy guidance,” Jefferies said in a note.

In other news, Goldman Sachs (NYSE:GS) ended the day lower following reports the Wall Street banking giant is set to cut another round of jobs for the third time since September 2022 to offset the slowdown in deals activity.

(C) Reuters.

Investing.com — As anxiety-inducing as the drama over the U.S. debt ceiling was, it has faded from oil traders’ radar with the tentative deal reached between the White House and rival Republicans, leaving the market to agonize over two other things: Fed action over rates and OPEC’s decision on output.

Crude prices tumbled 4% on Tuesday amid mounting speculation that the Federal Reserve will raise rates for an eleventh time in 16 months when its policy-makers meet on June 14. The biggest signal for the central bank’s action will be in U.S. jobs data for May, due on Friday, that could show higher-than-expected payrolls growth that forces the Fed against pausing on rates.

Ahead of the Fed action will be the June 4 meeting of OPEC+, which groups the 13-nation Saudi-led OPEC, or Organization of the Petroleum Exporting Countries, with 10 other oil producers steered by Russia. Media reports over the past week have led to the notion that a Saudi threat to cut production further will be nullified by Russia’s lack of commitment in keeping to pledged cuts and committing to more reductions.

The Wall Street Journal, in a weekend article, said tensions were rising between Saudi Arabia and Russia as Moscow keeps pumping huge volumes of cheaper crude into the market that is undermining Riyadh’s efforts to bolster energy prices.

“Yes, the U.S. debt drama might have gone off traders’ radar but you have these two major things that are a bugbear for the oil market: What the Fed will achieve and what OPEC+ might not, giving the growing gulf on output between the Saudis and Russians,” said John Kilduff, partner at New York energy hedge fund Again Capital.

Also weighing on crude prices Tuesday was preliminary data indicating that the long Memorial Day weekend heralding the start of the U.S. summer driving season did not see as much fuel demand as thought. According to figures from GasBuddy, an app that tracks gasoline prices, demand for fuel paid for with the GasBuddy fuel card dropped by 1.3% last week.

With about three hours to settlement, New York-traded West Texas Intermediate, or WTI, crude settled down $3.21, or 4.4%, at $69.46 per barrel.

London-traded Brent crude, the global benchmark for oil, settled at $73.54 — down $3.53, or 4.6%, on the day.

Economists are forecasting U.S. non-farm payrolls to have grown by 180,000 in May. They predicted a similar payroll growth in May, against the 253,000 reported by the Labor Department.

Should the department report another jobs growth number above 200,000, it could influence the Fed to hike rates again in June instead of pausing them. The Fed has identified job and wage growth as the two key contributors of inflation.

All key metrics in the so-called Personal Consumption Expenditures, or PCE, Index that the Fed closely watches rose higher than expected last month.

From an economic perspective, stronger labor numbers are good for oil as more Americans moving about for work means higher fuel consumption. For gold, stronger economic numbers are usually a negative as less money will flow to safe havens.

But in an environment of Fed rate hikes, job numbers exceeding expectations typically bump up the dollar, weighing across the board on commodities priced in the U.S. currency. In Tuesday’s session, the Dollar Index, which pits the greenback against six other major currencies led by the euro, hit a near one-week high at 104.38. The index is due to close higher for May, for the first time in two months, after a U.S. banking crisis erupted in March.

The Fed has added 500 basis points, or 5%, to rates since the end of the coronavirus pandemic in March 2022, bringing them to a peak of 525 basis points, or 5.25%.

Fed Governor Chris Waller suggested last week that the central bank may skip a rate increase on June 14, but still lean towards a July hike depending on inflation data. St. Louis Fed President James Bullard, one of the more aggressive advocates for tighter monetary policy, has suggested at least two more rate hikes this year, totaling 50 basis points, that would bring rates to a peak of 5.75%.

OPEC+, meanwhile, has had limited success over the past two months in trying to push crude prices up with production cuts.

The 23-nation alliance announced a 1.7 million-barrel-per-day cut in April, on top of an October undertaking to shed 2M barrels daily.

After the April cut was announced, crude prices only went up for two weeks, before turning lower over four weeks, erasing some 15%. The earlier pledge to cut 2M barrels fared worse, resulting in just a few days of gains before prices tumbled to 15-month lows in March.

Last week, Saudi Energy Minister Abdulaziz bin Salman issued a warning to the short sellers in oil, hinting at further cuts. But Russian President Vladimir Putin later said oil prices were approaching “economically justified” levels, indicating that more output reductions might not be required in Moscow’s opinion.