The economic calendar in the North American session will include:
- Existing home sales at 10 AM ET. The expectations are 4.21M versus 4.19 billion last month
- At 10:30 AM, the weekly oil inventory data from the EIA will be released with crude oil stocks expected to show a drawdown of -2.547M. The private data showed a surprise build of 2.48M
- Later at 2 PM, the Fed minutes from the May meeting
Recall the Federal Open Market Committee (FOMC) decided to keep the federal funds rate steady at a range of 5.25-5.50%, which was in line with market expectations.
The FOMC announced a more aggressive approach to tapering its quantitative tightening program. Specifically, they reduced the monthly cap on Treasury runoff from $60 billion to $25 billion. However, the cap on agency debt and mortgage-backed securities remained at $35 billion.
The Fed acknowledged a slowing in the pace of inflation reduction over recent months, despite some easing over the past year. Fed Chair Jerome Powell emphasized the Fed’s commitment to maintaining current interest rates as long as necessary to ensure inflation moves sustainably towards the 2% target. However, Powell also does not anticipate a rate hike.
The FOMC acknowledged that risks to achieving its dual mandate of maximum employment and price stability have become more balanced. Nonetheless, there are ongoing concerns about potential employment downturns.
Looking ahead, the FOMC’s policy decisions are inclined towards potential rate cuts, though the criteria for such cuts have become stricter. Chair Powell indicated that any future rate cuts would be contingent on sustained positive inflation readings over several months, emphasizing a data-dependent approach to policy adjustments.
Chicago Fed Pres. Goolsbee is expected to speak at 9:45 AM ET.
The biggest event of the day may occur after the close line Nvidia announces its earnings.
EPS is expected at $5.60 on revenues of $24.6 billion.
In the same quarter last year, the company announced earnings of $1.09 on revenues of $7.192 billion. Shares of Nvidia closed at a record level yesterday $953.86. That is up 92.61% this year, and are up over 200% since the earnings release last year at this time. That sounds like an overextension, but given the changing EPS and change in revenues, the gains in the stock or less than the gains in the financial numbers.
