Futures down on caution ahead of Nvidia results, Fed minutes

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[May 22, 2024]  By Ankika Biswas and Lisa Pauline Mattackal
(Reuters) -U.S. index futures slipped on Wednesday as investors exercised caution ahead of AI chip leader Nvidia's quarterly results and the Federal Reserve's policy meeting minutes due later in the day.  

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., May 15, 2024. REUTERS/Brendan McDermid/File Photo

All eyes will be on whether semiconductor bellwether Nvidia's first-quarter results, due after market close, can meet sky-high expectations and sustain a rally in shares of the company and other AI-related stocks.

Nvidia has emerged as the third-largest U.S. company by market value after a more than 92% surge in its shares this year and an over three-fold jump in 2023.

"Despite the stock's incredible recent performance, there's tension in the market, with investors eager to see if Nvidia's impressive momentum from 2023 has carried into early 2024," said Sam North, analyst at investment platform eToro.

"We should note that the bar is set pretty high, and another double-digit beat and raise might be a tall order."

The company's shares were down 0.4% in premarket trading, after rising more than 3% over the past two days.

Nvidia's results will test the strength of Wall Street's recent bullish run that has carried all three major indexes to record highs this month, driven by a strong earnings season as well as renewed hopes for interest-rate cuts and a so-called soft landing for the U.S. economy.

The tech-heavy Nasdaq and the benchmark S&P 500 closed at fresh record highs on Tuesday.

Market participants are also keenly awaiting minutes from the U.S. central bank's latest policy meeting, due at 2 p.m. ET, for more clarity on the timing of a rate cut. Several policymakers have reiterated the need to wait for more signs of easing inflation before cutting rates.

Traders see near 69% odds of the Fed cutting rates in September by at least 25 basis points, according to CME's FedWatch Tool.

At 7:00 a.m. ET, Dow e-minis were down 43 points, or 0.11%, S&P 500 e-minis were down 7.5 points, or 0.14%, and Nasdaq 100 e-minis were down 13.75 points, or 0.07%.

Shares of retailer Target dropped 8.1% on weak quarterly results and second-quarter forecasts for profit and comparable sales that were below expectations.

Apparel retailer Urban Outfitters climbed 5.8% after first-quarter results beat estimates on strong demand.

Lululemon Athletica dropped 4.3% after the athletic apparel retailer announced the departure of Chief Product Officer Sun Choe.

(Reporting by Ankika Biswas and Lisa Mattackal in Bengaluru; Editing by Devika Syamnath)

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