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Apple Stagnation, NVIDIA Earnings, GDP Revision


© Reuters.

Geoffrey Smith — Nasdaq Futures Underperform in Premarket, as Stagflation Hits Apple and NVIDIA. In the face of growing evidence that the labor market is becoming more sluggish, the U.S. will release revised GDP figures and jobless claims data for the first quarter. Updates from Dollar General and Dollar Tree} may shed light on how quickly consumers are scaling down their spending. Russia’s central banks cut interest rates in response to financial instability. And the U.K. plans to raid energy companies to assist poorer households. This is what you should know about financial markets Thursday 26th May.

1. Staglfation is one of the most popular products on the market

Apple has been hit by stagflation (NASDAQ:). A Bloomberg report, citing unnamed sources, claims that Apple expects to sell its iPhones in the next year. Lockdowns in China have disrupted production, while demand is stalling as consumers’ disposable income is eroded by inflation.

Bloomberg reported that Apple will ship 220 million smartphones this year rather than the predicted 240 million by analysts. Apple stock declined 1.4% premarket, but it is comfortably higher than the 12-month low that it reached last week.

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The premarket sector, another tech market darling, is facing bigger challenges. Nvidia Chipmaker (NASDAQ) said it suffered a loss of $500 million in China, Russia and China in its current quarter. Additionally, data center orders were cancelled.

Nvidia shares fell 5.3% as a result. It still trades at 44 times trailing 12-month earnings, double Apple’s multiple.

2. U.S. GDP revision, jobless claims due

At 8:30 GMT (1230 GMT), the U.S. will release revised data for its first quarter. Analysts are expecting a 0.1% improvement over the 1.4% quarter’s preliminary reading.

While the initial figure was largely due to stocking, it also indicated signs of a slowdown in consumer spending. Since then, data have shown that inflation is causing a slowdown in consumer spending.

More timely will be the weekly reports, due simultaneously. Since April’s beginning, they have been increasing from their historically low levels. As more businesses are put under increased pressure to boost profit margins, a rise in these numbers is likely. Initial claims are expected to have stayed around last week’s six-week high of 218,000.

3. Stocks will open higher than usual; earnings of discounters are in focus

U.S. stock markets are set to open mostly higher, despite the disappointments from Apple and Nvidia, extending the gains they made after digesting the of the Federal Reserve’s last meeting on Wednesday.

The minutes largely confirmed expectations of two more half-point increases in the fed funds target rate at the Fed’s next two meetings, but confidence is growing that the Fed may at least pause its tightening after that as the housing and labor markets lose more of their froth.

At 6:01 AM ET, they were up 90 points or 0.3% and up 0.2% respectively. , however, couldn’t escape the Nvidia news, falling 0.1%.

Other stocks likely to be in focus later include Chinese giants Dollar General (NYSE:) and Dollar Tree (NASDAQ:), which report earnings alongside Macy’s and Build-a-Bear. Costco (NASDAQ) reports shortly after the bell. ZScaler and Ulta Beauty, (NASDAQ:), are due to report.  

4. Russia’s sharp interest rate cuts are a result of ruble panic abating

Russia’s central bank by 3 percentage points and promised more easing to come, in a further sign of confidence that it has banished any threat of financial collapse.

Even so, the CBR chose not to relax any more of the capital controls it imposed at the start of the war and warned that “external conditions remain difficult” for the economy.

To reach its highest level in one week, the dollar gained nearly 5% against ruble.

In other news, Turkish media reported Turkey saying that it is in talks with Russia about Ukraine allowing Ukraine to export its grain through Black Sea. The report comes amid mounting concerns of a food shortage due to a decrease in the exports region.

5. Aramco’s warning pushes oil higher; the U.K. announces windfall tax

Crude oil prices pushed higher, still supported by Wednesday’s U.S. government data that showed a slightly larger-than-expected last week. Warnings Saudi Aramco (TAWAUL: CEO Amin Naser on a shortage of global market capacity also contributed to the underpinning of prices.

At 6:10 am ET, the barrel was at $111.31, up 0.9%, and at $111.73, up 0.6%.

Britain is poised to be the latest to tax oil and gas producers with Treasury chief Rishi sunak expecting to redirect the funds to lower-income households. That comes a day after a damning report into repeated violations of lockdown rules on partying at 10 Downing St. Prime Minister Boris Johnson has said he doesn’t intend to resign.