Shares for NVDA surged after a better-than-expected earnings report forecast for 2024’s first quarter

Nvidia reported better-than-expected earnings for its fiscal 2024 first quarter, which led to a 26% surge in shares during extended trading. The company’s adjusted EPS was $1.09, surpassing the estimated 92 cents, and revenue amounted to $7.19 billion, exceeding the expected $6.52 billion. Nvidia also provided a strong forecast for the current quarter, projecting sales of around $11 billion, more than 50% higher than Wall Street estimates. The data centre group performed exceptionally well with $4.28 billion in sales, driven by increasing demand for GPU chips from cloud vendors and consumer internet companies. However, the gaming division experienced a 38% revenue drop due to a slower macroeconomic environment and the launch of new gaming GPUs. Nvidia’s automotive division, focused on self-driving cars, showed impressive growth but accounted for under $300 million in sales for the quarter. Despite the challenges faced in certain segments, Nvidia’s leading position in the AI chip market contributed to its overall positive performance.

Debt Ceiling Negotiations Remain Unresolved, Uncertainty Looms

Negotiations between President Joe Biden and Republican congressional leader Kevin McCarthy regarding the United States’ debt ceiling have shown signs of progress, but several issues remain unresolved. The talks, which took place at the White House, were described as productive by both sides, with McCarthy expressing optimism that an agreement would be reached. However, Democrats accused Republicans of using the economy as leverage to push their own agenda and emphasised the need for further concessions. Ratings agency Fitch placed the United States’ “AAA” ratings on negative watch, citing increased risks and political partisanship. The Treasury Department has warned that the government may not be able to pay its bills by June 1, heightening concerns of a potential crisis. The stock market reacted negatively to the debt-ceiling concerns. Failure to act in time could lead to a default with severe consequences for the economy and ordinary citizens.

Federal Reserve Divided Over Future Rate Hike Decision

Federal Reserve officials were divided at their last meeting on the path of interest rates, with some members advocating for further increases while others expected a slowdown in growth that would eliminate the need for tightening. The minutes of the meeting revealed that although the decision to raise the benchmark rate by a quarter percentage point was unanimous, there was disagreement regarding future policy moves, leaning towards a less aggressive approach. The Fed adopted a more data-dependent stance, considering various factors to determine the continuation of the rate-hiking cycle. The minutes also highlighted discussions on the challenges in the banking industry and the importance of raising the national debt ceiling in a timely manner. Market expectations suggested that the May rate hike would likely be the last in this cycle, with the possibility of a rate