Nvidia earnings report as a market driver, falling oil, corporate and geopolitical news

Stock market news

• US stock indices dropped slightly amid falling crypto. Semiconductors, led by NVDA, were among the leaders of the decline - investors are afraid of a bad market reaction to the report. But the fall of NVDA shares before the report may actually be positive - often the weaker the paper approaches the report, the more fears are already in the price and the reaction to the report itself may already be positive.
The leaders of growth were the defensive sectors XLV and XLP.
The market is not playing in a recession yet and is simply rotating from technologies to value stocks.
Flight from risk also led to an increase in TLT quotes by more than 1%. The decline in government bond yields is also helped by lower oil prices. The latter are falling in anticipation of a deal between Trump and Putin.
Everything is calm in the morning. It looks like now the main reaction will be to the NVDA report, which will be released today after the stock exchange closes.
SPY tested the first support level around 590 and successfully bounced off it. If the crypto calms down and the NVDA report does not worsen the situation, then it is quite possible that the calm bull market will resume.
Gold fell to $2900, but the bull market is still in force here.
Bitcoin fell below $86 thousand yesterday, but by the morning it returned to $89 thousand. The situation in crypto has stabilized - there is still money and desire among buyers.

• AI frontrunner Nvidia's quarterly earnings report will be the main event for markets on Wednesday, with much riding on whether the chipmaker delivers results that could reassure investors who are hesitant about big AI spending. Investors have been skeptical of the U.S. tech giants since Chinese startup DeepSeek shook up the industry with AI technology that appears to be cheaper but just as effective as early leaders.

The market estimates Nvidia's fourth-quarter sales will be $38.5 billion, with first-quarter sales forecast at around $42.5 billion.

As usual, the options indicate a move in the stock price of about 8% in either direction if the results are unexpected.

"This earnings report is not just about Nvidia... It's about whether the AI ​​revolution can maintain its breakneck pace," said Jacob Falkenkron, global head of investment strategy at Saxo.

Easing fears that DeepSeek will trigger a slump in demand for AI chips, sources told Reuters that Chinese companies are increasing orders for Nvidia's H20 chips due to growing demand for low-cost AI models.

• DeepSeek is accelerating the launch of a successor to the R1 model that brought the startup to prominence last month, three people familiar with the company told Reuters. The R2 is likely to worry the U.S. government, which has made AI leadership a national priority.

• The country's technology war with China is likely to escalate as President Donald Trump's administration plans to tighten restrictions on semiconductor exports to China. Trump has already signed a memorandum restricting Chinese investment in U.S. strategic areas.

• A Chinese government official said Wednesday that Taiwan is seeking to hand over the island's semiconductor industry to the United States as a "souvenir" to use as leverage in seeking support from Washington.

Still, investors appeared to shrug off the growing tensions for now. Hong Kong-listed stocks jumped 2.5% on Wednesday, with technology shares up 3.7% after falling in the previous session. Mainland China saw similar gains.

• U.S. Treasury yields rebounded from their lowest in months after the Republican-controlled U.S. House of Representatives approved Trump's $4.5 trillion tax cut plan, significantly boosting his priorities for 2025.

The bleak economic outlook continued to haunt investors as they increased bets on further interest rate cuts by the Federal Reserve this year.

• Fed funds futures point to more than 50 basis points of easing priced into the price by year-end, up from about 40 basis points a week ago. That in turn undermined the dollar on Wednesday.

• Nvidia (NVDA) has filed a lawsuit against the European Union's antitrust regulator over its probe of its acquisition of Run:ai.
The company argues the review was unnecessary because the deal did not meet the EU's merger regulation thresholds. Nvidia is challenging the Italian antitrust authority's direction, which it says relied on vaguely defined powers. The lawsuit could affect future regulatory decisions on mergers, though it does not yet affect the acquisition.

• Walgreens Boots Alliance (WBA) shares rose 5% on news of a potential buyout by Sycamore Partners.
The private equity firm is reportedly working with Morgan Stanley and UBS to finance a $10 billion acquisition package.

• Realty Income (O) reported slightly weak results. The company's 2025 guidance came in below analyst estimates, sending shares down 2%. Realty Income continues to focus on disciplined capital deployment and expects moderate rent growth next year.

• Tempus AI (TEM) reported weak results. However, the company remains bullish on its 2025 outlook, predicting strong revenue growth and improved EBITDA from its AI-driven healthcare innovations.
TEM shares fell 15%.

• Zoom Video Communications (ZM) beat Q4 earnings per share expectations. The company reported strong enterprise growth and improved cash flow, maintaining stable operating margins as it navigates changing demand from the pandemic.
ZM shares fell 8%.

• BP is set to announce a potential sale of its lubricants business and abandon plans to cut oil and gas production as it moves away from renewable energy.

• Hims & Hers (HIMS) shares fell 22% on Tuesday after reporting better-than-expected fourth-quarter results.
But the company confirmed it may soon stop selling some of its combination weight-loss products after the U.S. Food and Drug Administration said a shortage of GLP-1 drugs had been resolved.

• PayPal (PYPL) held its first Investor Day in 4 years. Venmo plans $2+ billion in revenue by 2027. The main focus is on increasing transaction margins and international expansion
. PayPal is betting on scaling the business and strengthening partnerships.
PYPL shares fell 2%.

• Apple (AAPL) will continue to develop its DEI diversity and inclusion programs - shareholders rejected a proposal to cancel the initiatives.

• Tesla (TSLA) car sales in Europe fell 45% in January 2025, while rival automakers reported a surge in demand for electric vehicles. According to the European Automobile Manufacturers Association, the Elon Musk-led company registered just 9,945 cars in January, compared with 18,161 in January 2024.
TSLA shares fell 8%.
Market cap fell below $1 trillion for the first time in three months.

• Treasury yields fell to their lowest levels in a year as consumer confidence showed the U.S. economy needed help.

• BofA chief expects Fed to hold rates, calls for easier regulation. Bank of America expects the Federal Reserve to keep interest rates steady this year and next, Chief Executive Officer Brian Moynihan said Tuesday. “It will take several years to tame inflation,” and the Fed’s efforts to curb inflation will likely last until 2026.

• Shares in German defense companies Rheinmetall, Hensoldt, and Renk rose between 1% and 5%. Bloomberg reports that Germany is discussing 200 billion euros for an emergency defense fund.

• Tron to Remove Fees on USDT Transactions
Tron's Gas Free feature will be launched next week - USDT transactions will be free and will not require TRX in the wallet.
Whales Bought $2.5 Billion in Bitcoin - CryptoQuant

Cryptocurrency market shares fell as expected yesterday
MSTR -11%
HOOD -8%
COIN -6%

In the post-market, these shares are growing by 1-3% against the backdrop of stabilization of the situation in crypto.

• Hime Depot (HD) shares rose 3% yesterday after a strong report. Same-store sales rose 0.8% y/y, beating expectations of a 1.5% y/y drop in same-store sales.
That means HD's sales situation was tough, but not as bad as the market expected.

• LLY shares rose 2% after the drugmaker said it would sell higher doses of its blockbuster weight-loss drug Zepbound at a lower price for customers who pay out of pocket.

• SMCI shares are up 22% in premarket trading to $55. They were down 12% yesterday. The company has finally filed audited financial statements with the Securities and Exchange Commission.
In a Form 10-K, accounting firm BDO said it audited SMCI’s consolidated financial statements for the year ending June 30, 2024, and concluded that they “present fairly, in all material respects, the financial position of the company” for that period.

• Stocks after report
WDAY +12%
INTU +6%
CART -10%

 Key events that could impact markets on Wednesday:
- Nvidia earnings
- Federal Reserve's Tom Barkin and Raphael Bostic speak

Fundamental news

• Fresh U.S. housing market data
House Price Index +4.7% y/y (4.5% adjusted)
Consumer confidence posts biggest monthly drop since August 2021 amid inflation concerns
The Conference Board's consumer sentiment index came in at 98.3 in February, well below the revised 105 in January and below the 102.5 economists expected.
Small business owners felt more insecure about the future in January as they continue to deal with labor problems and lingering inflation
- According to the National Federation of Independent Business's monthly survey of small business owners,

• Global debt rises to record high - Institute of International Finance
The global debt-to-GDP ratio rose last year for the first time since 2020, as global debt ended the year at a new record $318 trillion and economic growth slowed, the Institute of International Finance said in a report on Tuesday. Bond vigilantes - big investors in government bonds - could punish governments that fail to control their deficits by selling their bonds and raising borrowing costs.

• Trump plans to launch a program to sell “Trump Gold Cards,” $5 million luxury visas for foreigners willing to invest and create jobs in America. Russian oligarchs could also qualify.
Sales are expected to begin in two weeks.

• French President Emmanuel Macron proposes to base French nuclear-capable fighter jets in Germany - expanding Europe's "nuclear umbrella" - The Telegraph.

• Mexican President: Security and trade talks with US continue.
No date set for talk with Trump yet.

• Sheinbaum intends to conclude a tariff agreement with the United States by next Tuesday.

• Vivek Ramaswamy calls for abolition of income tax: 'It's your money, not the government'

• Britain plans to increase defence spending to 2.5% of GDP by 2027 by cutting aid to other countries,
Prime Minister Keir Starmer, quoted by Sky News.

• The Trump administration has proposed excluding Canada from the Western intelligence alliance Five Eyes - FT.

• A new congressional committee will conduct a major review of the Federal Reserve's policies. The main question is whether the Fed is getting the balance right between fighting inflation and protecting jobs, and how it makes decisions on interest rates.

• Bloomberg on Russia's return to the global raw materials market:
The question is not whether Russian raw materials will return to the global market, but when and under what conditions.
This moment is approaching, but the lifting of sanctions by the West and the normalization of trade will not be as negative for prices as it seems at first glance.

• Taiwan's coast guard has detained the Chinese vessel Hong Tai. It was caught cutting the undersea cable between Taiwan and Kinmen Island.

• “In the near term, debt brake reform is out of the question because it is a complex task.” – Merz.

• US Treasury Secretary Bessent promises to re-privatize economy that is 'fragile underneath'
The US economy is more fragile underneath than economic indicators suggest, and Bessent has promised it will be re-privatized.