By Geoffrey Smith
Investing.com -- The U.S. publishes revised data for fourth quarter gross domestic product, a day after the Federal Reserve's minutes indicated frustration with markets trying to bounce it into an early pivot. Other central banks around the world are executing their own pivots, as Korea stops raising rates and Turkey cuts. Nvidia brings cheer to the chipmaking sector with a forecast of an AI-driven boom. Stocks are finding a floor after steady losses over the last week. Alibaba reports earnings. And crude oil prices edge higher despite another steep rise in U.S. inventories. Here's what you need to know in financial markets on Thursday, 23rd February.
1. U.S. GDP, jobless claims due
The real Gross Domestic Product (GDP) of the US expanded at an annualized rate of 2.7% in the fourth quarter, the US Bureau of Economic Analysis' (BEA) second estimate showed on Thursday. This reading came in below the initial estimate and the market expectation of 2.9%.
"The updated estimates primarily reflected a downward revision to consumer spending that was partly offset by an upward revision to nonresidential fixed investment," the BEA explained in its publication. "Imports, which are a subtraction in the calculation of GDP, were revised up."
2. Nvidia forecasts AI-driven boom
Nvidia (NASDAQ:NVDA) threw itself onto the AI bandwagon, forecasting a boom ahead in demand for its chips from data centers that, it expects, will be busy using the new generation of AI tools such as ChatGPT.
The company also noted a rebound in demand from the video gaming sector, after the slump that followed the end of the pandemic. That's of more immediate value to the company, given its dominant position in the sector.
The stock jumped over 8% in premarket trading and also lifted contractor Taiwan Semiconductor Manufacturing (NYSE:TSM) and rivals BE Semiconductor Industries (AS:BESI) and Advanced Micro Devices (NASDAQ:AMD).
Nvidia's update came on the same day that Intel (NASDAQ:INTC) slashed its dividend by two-thirds to fund a massive expansion of chipmaking capacity in the U.S.
3. Stocks set for modest bounce; Nvidia lifts chipmakers
U.S. stock markets are set to open modestly higher, coming off the one-month lows that they hit on Wednesday. The minutes of the last Fed meeting contained little that was not already priced in, and analysts noted that the spate of stronger-than-expected economic data since the meeting had reduced the minutes' relevance.
By 06:48 ET, Dow Jones futures were up 72 points or 0.2%, while S&P 500 futures were up 0.4% and Nasdaq 100 futures were up 0.8%, with chipmakers leading the way after Nvidia's update.
Other stocks likely to be in focus later include shale producer Pioneer Natural Resources (NYSE:PXD), which posted better-than-expected earnings at the end of a day when its stock hit a five-month low, and Lucid Group (NASDAQ:LCID), whose forecast of a doubling of production this year disappointed market hopes. The stock fell over 10% in premarket.
Elsewhere, the National Transportation Safety Board is due to release its report on the derailment of a Norfolk Southern (NYSE:NSC) train carrying hazardous chemicals.
Alibaba (NYSE:BABA) is the big earnings update of the day, with American Tower (NYSE:AMT), Keurig Dr Pepper (NASDAQ:KDP), Newmont Goldcorp (NYSE:NEM) and Cheniere Energy (NYSE:LNG) in the supporting cast.
4. Eurozone core inflation sticky in January; Korea pauses hikes, Turkey cuts
Eurostat drew a line under the great inflation mystery of January 2023, saying that prices fell 0.2% on the month, bringing the annual rate down to 8.6% from 9.2%. Core prices fell a stronger 0.8%, but the annual rate ticked up to 5.3% from 5.2%.
Economists zeroed in on the last figure in particular, seeing it as the main reason for the upward repricing of ECB rate expectations over the last week.
Elsewhere in Europe, Bank of England policymaker Catherine Mann echoed a concern that also featured in the Fed minutes – namely, that expectations of a 'pivot' by central banks had led to an easing of financial conditions. This made it more likely that inflation stays higher for longer.
In Asia, the Bank of Korea kept its key rate unchanged after 12 months of successive rate hikes. However, the Turkish central bank cut its key rate by 50 basis points to 8.5%, the lowest in two years.
5. Oil shrugs off big rise in U.S. inventories
Crude oil prices rose, undeterred by another massive build in U.S. crude stockpiles. The American Petroleum Industry said inventories rose by nearly 10 million barrels last week, far above estimates. The U.S. government's data may or may not corroborate that at 11:00 ET.
By 06:15 ET, U.S. crude futures were up 0.9% at $74.64 a barrel, while Brent crude was up 0.9% at $81.30 a barrel.
Prices had been supported on Wednesday by a Reuters report suggesting that Russia intends to cut exports from its western ports by as much as 25% for a month in an effort to squeeze more revenue out of shipments that are being restricted by western sanctions.