The stock market closed with mixed results on Thursday (May 25) as investors remained concerned about ongoing discussions surrounding the US debt ceiling. While the Dow Jones ended the day in negative territory, the Nasdaq saw a significant rise of over 200 points. This surge was primarily driven by the stellar performance of Nvidia, the world’s most valuable semiconductor company. Nvidia’s impressive earnings surpassed analysts’ expectations, leading to a boost not only for the company itself but also for other tech giants like Microsoft and Alphabet, who are involved in artificial intelligence (AI) development.
Nvidia reported earnings per share of $1.09, exceeding the projected 92 cents, and generated revenue of $7.19 billion, surpassing the estimated $6.52 billion. The company also provided an optimistic outlook for the current quarter, predicting sales of $11 billion, significantly higher than the Wall Street consensus. The strong demand for chips used in AI technology played a crucial role in bolstering Nvidia’s earnings.
Meanwhile, concerns over the US debt ceiling continued to worry investors as Fitch Ratings declared a negative outlook for the US Credit Watch. Fitch warned of a possible downgrade of the current AAA credit rating if negotiations to increase the debt ceiling fail to progress. This situation could potentially lead to a historic default on US debt.
Recent reports indicate a divergence of opinions between the White House and Congress on various issues, including spending on Democratic-led initiatives such as housing and education projects worth approximately $70 billion. If an agreement on raising the debt ceiling is not reached by June 1, the United States will face an unprecedented default.
In another development, Russian Deputy Prime Minister Alexander Novak announced that Russia does not support further cuts in oil output at the upcoming meeting of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC Plus, scheduled for June 4. However, during the April meeting, Saudi Arabia announced a voluntary production cut of 500,000 barrels per day, and OPEC Plus confirmed the decision made in October 2022 to reduce production by 2 million barrels per day until the end of 2023.
The Federal Reserve Bank of Chicago reported that the Chicago Fed National Activity Index (CFNAI) increased from -0.37 in March to +0.07 in April. This rise was driven by growth in production and employment, indicating a positive trend in economic expansion.
Notable economic data to be released today includes the US durable goods orders for April and the personal consumption expenditure price index (PCE) for April. Additionally, the University of Michigan will publish the May consumer confidence index at 9:00 p.m., providing further insights into the state of the US economy.