Investing.com -- Wall Street is warily awaiting the release of the latest quarterly results from chipmaking giant Nvidia, with blowout results likely needed to keep market confidence high. Apple is reportedly laying off staff, while bitcoin has fallen through a key resistance level.
1. Nvidia to determine market mood
Market darling Nvidia (NASDAQ:NVDA) is set to report its latest quarterly results Wednesday, and these numbers could be key in determining market sentiment going forward.
Nvidia's market value has ballooned thanks to its dominance of the computing hardware behind artificial intelligence (AI), resulting in its market capitalization soaring to $3.2 trillion, briefly becoming the world’s most valuable company in June.
The chipmaker's market value was around $390 billion on the eve of the launch of AI chatbot, ChatGPT, less than two years ago.
Its sheer size and position as an industry bellwether mean its earnings, due after the U.S. close, can move the entire market.
Options pricing shows that traders anticipate a move of around 9.8% in the company’s shares on Thursday, a day after it reports earnings, data from analytics firm ORATS showed.
Given Nvidia's market capitalization, a 9.8% swing in the shares would translate to over $300 billion, likely the largest expected earnings move for any company in history, analysts said.
Nvidia is expected to have recorded a year-over-year jump of about 112% in second-quarter revenue to $28.68 billion, according to LSEG data. But its adjusted gross margin likely dropped more than 3 percentage points to 75.8% from the first quarter, burdened by the cost of a production ramp-up to meet growing demand.
It remains to be seen whether even a doubling of revenue, if it was to occur, will be sufficient to impress the market given investors have tended to take a less forgiving view this season of big tech companies whose earnings failed to justify rich valuations or prodigious spending on AI.
2. Futures listless ahead of key earnings
U.S. stock futures were largely unchanged Wednesday, with investors warily awaiting the release of the latest quarterly results from chipmaking giant Nvidia.
By 04:00 ET (08:00 GMT), the Dow futures contract was 35 points, or 0.1%, higher, S&P 500 futures climbed 2 points, or 0.1%, while Nasdaq 100 futures fell by 3 points, or 0.1%.
The results from AI darling Nvidia are due after the close [see above], and could determine whether investor enthusiasm for all things artificial intelligence continues into the fall.
Aside from Nvidia, investors will also have the chance to study quarterly results from the likes of Bath & Body Works (NYSE:BBWI), Foot Locker (NYSE:FL) and Kohl’s (NYSE:KSS) before the open, while Salesforce (NYSE:CRM) releases its earnings later in the session.
Elsewhere, Nordstrom (NYSE:JWN) stock gained strongly premarket after the retailer beat earnings expectations in the second quarter, helped by its crucial Anniversary Sale event.
Semiconductor developer Ambarella (NASDAQ:AMBA) stock jumped over 18% after hours on upbeat revenue guidance in the third quarter, while PVH (NYSE:PVH), owner of Calvin Klein, slumped more than 7% after reporting a drop in second-quarter sales.
3. Apple lays off staff ahead of new iPhone unveiling - Bloomberg
The day after Apple (NASDAQ:AAPL) announced the departure of its long-standing chief financial officer Luca Maestri, Bloomberg has reported that the tech giant has also cut about 100 jobs in its digital services group amid shifting priorities in the company.
The biggest cuts were in teams working on Apple’s bookstore services, Bloomberg reported, and the move marks a rare instance of job cuts by the company which has tended to retain staff amid a growing wave of layoffs across its major tech peers.
The firm is set to unveil the latest iteration of its flagship iPhone in early-September, and will also start rolling out a slew of artificial intelligence features in its devices.
This event will initiate the “biggest upgrade cycle” in Apple’s history, “with AI now on the doorstep,” said analysts at Wedbush, in a note.
“In our view Apple could sell north of 240 million iPhone units in FY25 as this AI-driven upgrade cycle takes hold,” the analysts continued. “China remains the linchpin of growth for Apple and now this key region is set to see improving growth once again starting with iPhone 16 heading into fiscal 2025.”
4. Bitcoin feeling unloved
Bitcoin, the world’s largest cryptocurrency, fell on Wednesday, extending a sharp downturn from the prior session, dropping below the key $60,000 level.
By 04:00 ET, Bitcoin fell 6.7% to $58,806.0, down more than 3% on the week and over 11% lower this month.
Whale Alert, an X profile that tracks large crypto transactions using on-chain data, said about 30,000 Bitcoin tokens, worth $1.88 billion at current rates, were transferred from a cold wallet to crypto exchange Binance on Tuesday.
This transfer raised the possibility of a large sale given that it showed a large amount of Bitcoin being moved onto an exchange.
A report from blockchain research firm Glassnode also showed that net capital inflows into Bitcoin had “markedly cooled” in recent months, suggesting investor optimism over the launch of spot Bitcoin exchange-traded funds had cooled.
There could also be a political element to the recent weakness, with the race for the White House now looking a lot tighter than a few months ago after President Joe Biden withdrew his candidacy.
Trump has positioned himself as the pro-crypto candidate in the upcoming U.S. presidential election. Vice President Kamala Harris, the Democratic candidate, has yet to share a public view on the industry, but Biden’s administration has tended towards a heavy-handed regulatory view.
5. US stockpiles provide little crude support
Crude prices edged slightly lower Wednesday, struggling for support despite another outsized draw in U.S. inventories.
By 04:00 ET, the U.S. crude futures (WTI) dropped 0.2% to $75.38 a barrel, while the Brent contract fell 0.2% to $78.47 a barrel.
Data from the American Petroleum Institute, an industry body, showed U.S. oil inventories fell 3.4 million barrels in the week to August 23, more than expectations for a draw of 3 million barrels.
The data also showed sustained draws in gasoline and distillate stockpiles.
If confirmed by the official inventory data, which is due later on Wednesday, U.S. inventories have fallen for eight of the past nine weeks, driving hopes that demand in the world’s biggest fuel consumer remains strong despite recent signs of cooling in the economy.
But with September comes the end of the travel-heavy summer season, which could see some cooling in U.S. fuel demand.
Prices fell more than 2% on Tuesday, snapping a three-day streak of gains of more than 7%, amid lingering concerns over a global economic slowdown.