Today in the Market (5/24/2023)

Good Evening! On Wednesday, the US stock market experienced a decline due to concerns among investors regarding the prolonged delay in Washington’s debt-ceiling negotiations.

All three benchmarks ended the day in the red with S&P 500 down by 0.73%, the Dow Jones falling by 0.77%, and the Nasdaq Composite decreased by 0.61%

AHEAD OF THE GAME

Nvidia (NVDA) exceeded estimates from analysts for its Q1 fiscal earnings by demonstrating robust performance in its data center operations. But, let’s see how well they did:

  • Revenue: $7.2 Billion vs. $6.5 Billion Expected
    • Data Center: $4.2 Billion vs. $3.9 Billion Expected
    • Gaming: $2.2 Billion vs. $1.9 Billion Expected
  • Earnings Per Share: $1.09 vs. $0.92 Expected

What has been helping them? Nvidia’s graphics cards and server products have positioned it as a key player in the AI industry, resulting in a significant increase in its stock value. Nvidia’s shares have increased by 77% and AMD’s by 12% in the past year. The shares of Intel (INTC) have decreased by 30% during the same period.

Looking forward… Given that gamers have already acquired graphics cards and similarly equipped PCs, there is currently minimal incentive to upgrade in the near future. With that, all three companies are encountering similar issues within their respective client computing departments. However… The slowdown is expected to conclude shortly. Bloomberg data indicates that Wall Street anticipates Nvidia to report an increase in revenue for its gaming business during Q2, marking the first growth in this sector in a year.

TO INCREASE OR NOT TO INCREASE

During the most recent policy meeting, Federal Reserve officials held opposing opinions on the appropriate course of action concerning interest rates. While several officials expressed a preference for a pause, others advocated for maintaining flexibility in light of the uncertain economic outlook.

Where are we now? The Federal Reserve increased the target range for its benchmark interest rate by 0.25%, resulting in the highest level observed since September 2007. The move resulted in an increase of the fed funds rate to a fresh bracket of 5%-5.25%. Since March 2022, the Federal Reserve has raised the target range for its benchmark interest rate by 5 percentage points.

However, it’s not the least of our worries… The debt limit was a topic of discussion among officials, with certain individuals expressing fear regarding the possibility of it not being raised promptly. Numerous officials expressed the view that it was critical to promptly increase the debt limit to prevent the potential for significant damage to both the financial system and the wider economy.

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