Wall Street Eyes Breather After Record Run As Walmart Earnings, Fed Speakers In Focus: Analyst Banks Hopes On Nvidia Print, H2 Rate-Cut

Stocks may take a breather after Wednesday’s record run, fueled by a mild consumer price inflation report, with index futures holding relatively steady in early trading. However, traders might find some optimism in robust tech earnings. The market mood on Thursday could be influenced by various factors, including earnings from retail giant Walmart, Inc. WMT, as well as speeches by Federal Reserve officials and other Main Street events.

Cues From Previous Session

With consumer prices cooling off across the board, the major indices launched in rally straight out of the gates and finished solidly higher on Wednesday. A soft April retail sales report also lent support. The major averages all broke above their previous record and simultaneously hit a record high for the first time since March 21. Stocks across sectors advanced, with those belonging to the IT sector leading the gains.

Insights From Analysts:

Following the inflation data, fund manager Louis Navellier said he predicts that the Fed will be cutting rates on July 31 and probably another cut in September.

“Next week we are getting NVIDIA’s announcement which should be the grand finale for earnings. Expectations are sky-high with a 275% forecast of sales growth and over 400% forecasted earnings growth from Nvidia,” he said.

“It will be interesting if they can guide higher with such high expectations.”

The view was echoed by Morgan Stanley analyst Ellen Zentner as well. “The U.S. Federal Reserve will likely start interest rate cuts in September. Slowing inflation in the second half of the year should give the Fed confidence to move,” she said. 

Upcoming Economic Data:

• Labor Department’s jobless claims report (8:30 a.m. EDT): 221,000 estimated for the week ended May 11, down from 231,000 in the previous week
• Philadelphia Fed manufacturing survey (8:30 a.m. EDT): diffusion index of business activity expected at 8 in May, down from 15.5 in April
• Housing starts data (8:30 a.m. EDT): 1.40 million units estimated for April, up from 1.32 million units in March, and building permits estimated at 1.48 million units vs. 1.46 million units for March.
• Bureau of Labor Statistics import and export price indices for March (8:30 a.m. EDT)
• Fed’s industrial production report (9:15 a.m. EDT): 0.1% month-over-month increase for April, down from 0.4% increase in March
• Richmond Fed President Tom Barkin due to attend TV interview at 10 a.m. EDT
• Fed Vice Chair for Supervision Michael Barr testifies at 10 a.m. EDT
• Cleveland Fed President Loretta Mester: noon EDT
• Atlanta Fed President Raphael Bostic: 3:50 p.m. EDT

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Stocks In Focus:

• Cisco Systems, Inc. CSCO rose about 4.50% in premarket trading following the company’s earnings announcement and ZTO Express Inc. ZTO climbed over 11%.
• Other stocks moving on earnings reported before the market open are Baidu, Inc. BIDU (up over 1.5%), JD.com, Inc. JD (up nearly 4%), Deere & Company DE (down over 6%).
• Notable among those reporting after the market close are Applied Materials, Inc. AMAT and Take-Two Interactive Software, Inc. TTWO.

Commodities, Bonds, and Global Equity Markets:

Crude oil and gold futures traded modestly weaker and the 10-year bond yield remained subdued around 4.3% level. Bitcoin BTC/USD rallied strongly and traded past the $66K mark.

While the major Asian markets drew inspiration from Wall Street’s rally overnight and advanced strongly, European stocks, which already reacted to the data, were seen giving back some of Wednesday’s strong gains.

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