U.S. stocks consolidate in anticipation of NVIDIA report

The main indexes behaved sluggishly, feeling pressure due to the lack of a clear growth leader and the predominance of wait-and-see sentiment before the publication of NVIDIA‘s quarterly report (NVDA 134.81, -0.69, -0.5%), which was scheduled to take place after the close of trading.

In fact, trading was in consolidation mode amid rising Treasury yields, reports from the Financial Times that the Trump administration had demanded that semiconductor software developers stop selling to Chinese customers, as well as ongoing concerns about overvalued stocks.

All 11 sectors of the S&P 500 index ended the day in the red. The largest losses were incurred by utilities (-1.4%), energy (-1.3%) and materials (-1.3%). Small–cap stocks and value stocks also lagged, partly due to concerns about economic growth prospects.

However, it should be noted that trading volume remained relatively low on a day when the S&P 500, weighted by market capitalization, dropped below the 5,900 level towards the end of the session and closed at daily lows.

Some individual securities showed the opposite trend: shares of Abercrombie & Fitch (ANF 88.47, +11.32, +14.7%) rose sharply after the publication of the report, which exceeded analysts‘ expectations, and shares of Fair Isaac Corp. (FICO 1618.62, +115.01, +7.7%) — after raising the recommendation from Robert W. Baird to the “Buy” level (Outperform).

The rest of the day was marked by weakness: on the New York Stock Exchange, the number of stocks that went into negative territory was three times higher than the number of stocks that showed growth; on Nasdaq, it doubled.

Nothing has been published from important macroeconomic statistics in the United States. However, before the opening of trading, it was reported that the MBA mortgage application index decreased by 1.2% compared to the previous week: the number of applications for home purchase increased by 2%, while refinancing fell by 7%.

Treasury bonds were in demand at first, but later a sell-off began: the yield on 10–year securities reached 4.50%, and 30-year – 5.01%, before both indicators retreated slightly. As a result, the 10–year yield was 4.48%, and the 30–year yield was 4.98%. The bond market reacted poorly to the placement of five-year securities worth $70 billion, which was held with moderate demand, as well as to the publication of the minutes of the FOMC meeting on May 6-7. They noted an increase in uncertainty in economic forecasts and a potentially difficult choice for the Fed if inflation turned out to be more stable and the prospects for growth and employment deteriorated. However, market participants perceived these comments as well-known and somewhat outdated.

Our American FTinvest 11 portfolio also went through consolidation today; and if the decline was quite moderate in the morning, then there was a collapse in the last hours of the session and as a result, the overall decline for the day was 0.84%, the index closed at 741.44.