Wall Street on edge before Nvidia results

Good morning. Here's what happened overnight and what you need to know today.

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1.

Nvidia anxiety: US stocks fell on Wednesday ahead of Nvidia's highly anticipated quarterly report, with shares of the AI processor giant dropping 2%, trimming its year-to-date gain to 154%. Nvidia, considered the primary beneficiary of the AI boom, will face scrutiny over its continued ability to sustain super earnings growth amid concerns about rising spending from major tech players like Microsoft and Alphabet. Market volatility is expected, with options pricing indicating a potential move of close to 10% either way in Nvidia's shares post-earnings, according to data cited by Bloomberg and Reuters. Broader market indices also declined, with the S&P 500 down 0.80%, the Nasdaq down 1% and the Dow Jones down 0.11% shortly before the close.

2.

Telegram drama: The European Union (EU) is investigating whether Telegram violated EU digital regulations by understating its user numbers in the EU to avoid stricter oversight, the FT reported citing EU officials. The investigation comes as Telegram’s billionaire CEO Pavel Durov was released from police custody in France after four days of questioning over allegations that his messaging app was used for illegal activities, and the company failed to cooperate with law enforcement. Russian-born Durov, now a French-Emirati citizen is being transferred to court for further questioning ahead of a possible indictment, according to prosecutors cited by CNN. Telegram has not commented on the EU probe but has earlier said Durov has “nothing to hide”. The Wall Street Journal reported that six years ago, French President Emmanuel Macron tried to lure Durov and Telegram to relocate to France, in an effort to bolster the country’s tech sector. (The Financial Times)(CNN)

3.

Trillion club: Berkshire Hathaway's market value surpassed USD1 trillion ($1.48 trillion) for the first time, the only non-tech US company to reach the milestone. Warren Buffett’s conglomerate saw its Class A shares rise as much as 1.2% to USD699,578 each, lifting its market cap past the trillion-dollar mark. The Omaha-based firm, which owns brands like Geico and Dairy Queen, has gained about 30% this year, outperforming the S&P 500's 17% rise. Berkshire’s Class B shares were also higher on Wednesday to as much as USD466.60 each. (Bloomberg)(Reuters)

4.

Data deal: Federal Transport Minister Catherine King said states and territories have, for the first time, agreed to share confidential road crash data with the Commonwealth, amid ongoing confusion surrounding a new funding agreement for road and rail projects valued at tens of billions of dollars. The agreement, involving four states, includes a National Road Safety Data Collection and Reporting Framework and a National Road Safety Minimum Dataset. The Australian Automobile Association (AAA) and Senator David Pocock welcomed the data-sharing commitment but are seeking more clarity on its implementation, enforceability and connection to funding comitments. While King argues the states are now committed to a 50/50 funding split for nationally significant projects, instead to the traditional 80/20 split, states including Victoria and Queensland, dispute this. (Capital Brief)

5.

Retail reports: Foot Locker, PVH, Nordstrom and Abercrombie & Fitch reported mixed earnings results, reflecting challenges in the US retail sector. Abercrombie & Fitch posted strong second-quarter earnings, surpassing revenue and profit forecasts, but its shares plummeted over 17% after the CEO warned of an "increasingly uncertain environment," leading to a tempered full-year outlook. Foot Locker shares also fell despite a narrower-than-expected loss, as the company did not upgrade its full-year guidance. PVH, owner of Tommy Hilfiger and Calvin Klein, beat earnings expectations but saw an 8% drop in its stock due to a 4% decline in international revenue, primarily driven by weaker consumer demand in Asia-Pacific, including China and Australia. Nordstrom was up over 1% after exceeding earnings estimates and slightly raising its full-year guidance. (Reuters)(Barron’s)

6.

Micro delay: Super Micro Computer said it won’t be able to file its annual financial report in time, triggering the stock's largest intraday drop in nearly six years. The San Jose-based server maker cited the need for additional time to assess the effectiveness of its internal controls over financial reporting. The move came just a day after short-seller Hindenburg Research targeted the company, accusing it of accounting manipulation, undisclosed related party transactions and other issues. Super Micro shares plunged as much as 27.8% on Wednesday (to USD395.18 each), continuing a 54% decline over the past three months. (Bloomberg)(Wall Street Journal)

7.

Payroll gaffe: A technical glitch delayed the release of key payroll data by the US Bureau of Labor Statistics last week, leading to staff sharing the numbers with callers before they were publicly available, Bloomberg reported citing a Department of Labor (BLS) spokesperson. The delay of a key downward revision on US payrolls on 21 August lasted over 30 minutes and forced BLS staff to manually upload the data, and a lack of internal communication led to some employees providing the figures to those who inquired. This incident follows other recent mishaps at the BLS, including the inadvertently early release of consumer price index data in May. The agency is now implementing stricter data-release protocols, including multiple distribution methods and a new policy for handling public inquiries, the publication reported. (Bloomberg)

8.

Sanctioned Israelis: The US has imposed sanctions on Israeli NGO Hashomer Yosh and Yitzhak Levi Filant, a security official at the Yitzhar settlement, for supporting violence against Palestinians in the West Bank. The move comes as the Biden administration targets extremist settler violence, viewing it as a threat to peace and security. The US says Hashomer Yosh aided illegal outposts and fenced off the Palestinian village of Khirbet Zanuta after residents were expelled. Filant is accused of leading armed settlers in February to set up roadblocks and expel Palestinians. Israeli Prime Minister Benjamin Netanyahu criticised the sanctions, which freeze US assets and bar Americans from dealings.(US Department of State statement) (CNN)(Reuters)