May 28th, 2025
Market Performance:
• A quiet morning as investors gear up for Nvidia’s earnings, Salesforce earnings and the Fed minutes.
• Stocks headed slightly south. The Dow Jones Industrial Average fell around 0.3% on the heels of a rebound-on Tuesday. The S&P 500 and tech-heavy Nasdaq Composite also declined by about 0.2%.
• Wall Street will look for clues to AI demand when Nvidia reports. Last time Salesforce reported it missed analysts’ revenue estimates and had disappointed with its forecast.
Economic Takeaways:
• Bitcoin (/BTC) and other cryptocurrencies fell for the second straight day. The slip came as the 2025 Bitcoin Conference began in Las Vegas.
• Bond yields rose in Japan Wednesday amid modest demand at a 40-year Japanese bond auction.
• A U.S. 20-year auction had weak demand last week, but a 2-year auction did better yesterday. A 5-year auction is today. U.S. Treasury yields climbed this morning after a drop yesterday.
• As of early Wednesday, futures trading indicated just a 2% chance of a Fed rate cut in June, and 24% in July, according to the CME FedWatch Tool.
Nvidia is on Everybody’s Mind Today
The AI chipmaker titan will be reporting its earnings report today after the close and some analysts are calling for modest results.
Most of the time Nvidia is at center focus with guidance and gross margin when they report. Last time a slight drop in margin had hurt shares.
“Investors have come to expect a beat-and-raise quarter from Nvidia, while maintaining low-to-mid 70% gross margins, so forward revenue and gross margin guidance will be important metrics to gauge both demand and pricing,” said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research. Analysts expect quarterly earnings per share of $0.93 and revenue of $43.25 billion for the AI giant.
One question heading into this highly anticipated report is how guidance might be affected by U.S. export restrictions on shipments to China.
The restrictions had hurt the company over the last few months. Nvidia said the licensing requirement on its H20 chip that caused the firm to take a $5.5 billion charge in April could ultimately cost it $15 billion. It wasn’t made clear exactly how those costs will be spread across coming quarters or if those projected sales were part of previous guidance.
The average analyst projection is for revenue growth of 52% in the current quarter to around $45.7 billion, according to Yahoo Finance.
The Fed Minutes
The Fed minutes will give a window to policy today. The May Federal Open Market Committee (FOMC) minutes will be at 2 p.m. ET.
Investors will look for signs of anyone at the Federal Reserve departing from the current playbook on rates. Almost all Fed speakers over the last week have stood by hawkish comments made by Fed Chairman Jerome Powell earlier this month when he warned that tariff-generated inflation could keep the Fed from making any near-term cuts.
June’s Fed meeting will bring new projections for rates but today’s meeting “likely won’t shed additional light on the path for Fed policy,” said Cooper Howard, director, fixed income strategy at the Schwab Center for Financial Research, adding that “we expect the Fed to lower rates later this year but it will be largely dependent on how the labor market evolves.”
Notables
• Macy’s (M) reported before the bell and moved higher after beating analysts’ earnings and revenue estimates in their latest quarter. However, the retailer cut its full-year earnings per share outlook, citing tariffs and “some moderation in consumer discretionary spending.”
• Abercrombie & Fitch (ANF) shares soared over 24% in early trade as investors digested their quarterly report. Sales in the first quarter rose 8% from a year ago to a record of $1.1 billion, the company said, led by Hollister brands. The company slightly raised its full-year sales outlook.
• Dick’s Sporting Goods (DKS) rose 1.3% as the retailer beat analysts’ quarterly revenue estimates and confirmed its previous 2025 outlook. The company noted a “strong start to the year.”
• Nvidia climbed 0.55% in pre-market trading after a 3.2% rise yesterday. A Reuters report revealed that Nvidia would launch a cheaper version of its advanced Blackwell AI chip in China.
• Salesforce shares flattened in pre-market trading after a 1.5% climb yesterday ahead of earnings later today. On Tuesday the company acquired Informatica (INFA) for $8 billion.
• Tesla (TSLA) rose 0.9% as recent positive momentum continued for the stock as investors continued remaining optimistic over Elon Musk heading back to full focus at the company.
• Okta (OKTA) fell almost 12% ahead of the open after the identity and access-management company reported a first-quarter profit but gave guidance that underwhelmed investors.
What’s Important Tomorrow
GDP and jobs data is on deck for Thursday. Both could provide early hints of trade impact.
A second government estimate of first quarter gross domestic product (GDP) will be released on Thursday before the open. The first estimate surprised with a negative reading of –0.3%, a number that was discounted slightly because it reflected a surge in imports as companies scurried to ship products in before tariffs took effect.
Weekly initial jobless claims, which analysts peg at 230,000, according to Briefing.com, will also be out tomorrow.
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