And then comes the turn – Wall St cools after Nvidia beat

Nvidia’s stronger quarterly earnings spurred gains through the Asian and European trading sessions, but US stock markets turned as investors remain nervous about the future of the artificial intelligence boom, with Cboe’s volatility index, known as Wall Street’s fear gauge, spiking higher.

Caution about the pace of AI growth is only part of the puzzle, with a mixed US jobs report continuing to keep a cloudy picture as to whether the Federal Reserve will cut its key rate next month.

Meanwhile, Walmart rallied after the world’s biggest retailer raised its annual earnings forecast for a second time this year, and flagged a switch to the new world as it prepares to shift its listing to the Nasdaq from the New York Stock Exchange.

And in the antipodes, Australian futures are pointing to a soft start to the day for the S&P/ASX 200 index when trading opens across the Tasman, while investors on this side of the Tasman are preparing for earnings from Black Pearl Group, Eroad and Oceania Healthcare and annual meetings from Sky Network Television and Synlait Milk.

The tide goes out

Nvidia reversed earlier gains, recently down 1% in late trading, as investors cooled on the chipmaker’s stronger-than-expected quarterly earnings, which included increased guidance outpacing analysts’ picks.

The result spurred a rally across Asia which carried on into European markets, with the UK’s FTSE 100 index up 0.2%, Germany’s DAX 30 gaining 0.5% and France’s CAC 40 advancing 0.3%.

Wall Street opened stronger before reversing those gains, with the Nasdaq Composite down 1.1% in late trading as investors backed away from earlier optimism that Nvidia’s result reaffirmed hopes about the pace of growth in AI. The S&P 500 was down 0.8%.

The volatility index jumped 14%, hitting a month-high, as investors remain uneasy about the frothy valuations underpinning AI. Bitcoin dropped 2.6% to US$87,139 at 7am in Auckland.

“After yesterday’s NY close, Nvidia didn’t disappoint, reporting strong growth in revenue and profits and increasing current quarter guidance,” Bank of New Zealand senior market strategist Jason Wong said in a note. “The S&P 500 was up almost 2% in early trading, before a distinct change in market sentiment set in, resulting in a steep decline and the index is down 0.9% in early afternoon trading.”

The kiwi dollar traded at 55.93 US cents at 7am in Auckland from 56.08 cents yesterday as delayed US jobs data showed unemployment nudged higher in September, even as employment grew at a faster pace than expected.

A federal affair

Bond traders increased their pricing in of a possible rate cut by the Federal Reserve next month to 10 basis points, from seven points yesterday, although more hawkish central bankers have been airing their views that the Fed doesn’t need to move in December.

Meanwhile, Walmart gained 5.9% in late trading after the world’s biggest retailer posted strong quarterly sales and again raised its outlook for the full year. The chain also set a Dec 9 date to shift its listing to the Nasdaq from the New York Stock Exchange.

And across the Atlantic, BNP Paribas led the CAC 40 higher as it rose 4.4% after announcing a new share buyback programme and lifting its target capital buffer.

The soft tone is set to carry through into the antipodes, with Australian futures pointing to a 0.5% decline for the S&P/ASX 200 when trading opens across the Tasman.

Locally, investors will be watching earnings from Oceania Healthcare, Eroad and Black Pearl Group, while annual meetings from Sky Network Television and Synlait Milk will provide an update on those sectors.

And Statistics New Zealand will release merchandise trade figures for October.

Reporting by Paul McBeth. Image from Woldai Wagner on Unsplash.