Investors Mull Nvidia, Await Walmart, Housing Data

0:05Welcome to the Schwab Market Update Podcast, where we prepare you for each trading day with a recap of recent news and a look at what's ahead. I'm Keith Lansford, and here is Schwab's early look at the markets for Thursday, May 21st. The market might take its cues from two of the biggest stocks, NVIDIA and Walmart. Results from NVIDIA late Wednesday topped expectations, though investors initially seemed nonplussed. Walmart reports this morning. NVIDIA's earnings followed a rebound on Wall Street Wednesday, where stocks had sagged since late last week. Chip shares climbed 4 % ahead of NVIDIA's report, helped along with the rest of the market by a 5 % drop in crude and a sharp 10 basis point decline in the swollen 10-year Treasury note yield back below 4.6%.

1:02All this appeared linked to President Trump's comments about talks with Iran being in the final stages, though he's also threatened Iran this week. For its part, Iran threatened attacks of its own, and the Wall Street Journal reported that Trump and Israeli Prime Minister Netanyahu had a testy call, with Netanyahu concerned the U.S. might make a deal that doesn't end Iran's nuclear aspirations. NVIDIA's earnings per share of$1.87 and revenue of$81.61 billion, top consensus of$1.76 and$78.9 billion, respectively. NVIDIA also guided for second quarter revenue of around$91 billion above the$87.29 billion fact-set consensus.

1:51The stock slipped slightly in post-market trading after the news. The key data center component topped analyst estimates, but some participants might have been disappointed with second quarter revenue guidance As Bloomberg noted, some analysts had expected as much as$96 billion. NVIDIA also raised its dividend and announced an$80 billion share buyback, helping answer questions about what it might do with extra cash. Gross margin might be one of the bigger elements of the report from a stock market perspective, coming in at 75 % on an adjusted basis in line with the company's own guidance and above the consensus estimate of 74.5%.

2:32Heading in, analysts felt anything at or above 75 % would help confirm NVIDIA's pricing power remains intact. The company's guidance for margin was in the 75 % range as well. Overall, the quarter was a solid beat and raise, with guidance firmly above estimates and data center revenue accelerating on a year-over-year basis, said Nathan Peterson, Director of Derivatives Research and Strategy at the Schwab Center for Financial Research, or SCIFR. There really doesn't seem to be any signs of demand deceleration from the metrics or CEO commentary, but perhaps the muted response is due to the historical precedence from a post-earnings reaction and the notion that NVIDIA, given its dominance, has limited upside potential in market share gains.

3:22In other earnings news yesterday, tidings from the retail and restaurant sectors generally looked good, though not all the stocks responded positively. Some of the companies reporting better-than-expected results included Kava Group, Toll Brothers, Lowe's, and Target.

3:41Retail earnings ramp up this morning with Walmart, the biggest of the big boxes. One element that may take on a larger role in its results and outlook is the price of gas, which hit$4.50 in the U.S. this week, the highest in four years. Walmart has a sweet and sour relationship here, benefiting to some extent as a gasoline retailer, but perhaps hurt by consumers deciding to do less shopping. Walmart and other discount retailers often benefit during inflationary times, however, as shoppers flock there looking for cheap goods. Even Walmart can't necessarily outcompete smaller dollar-type stores in price, however, which could mean more competition from below.

4:27Last time out, Walmart disappointed with an earnings outlook that fell short of Wall Street's estimate despite solid holiday quarter sales, CNBC noted at the time. E-commerce and online pickup demand rose that quarter, trends to watch this time considering the rise in fuel costs since then. Walmart said in February it saw gains across all income levels of customers, but the most from high-income households. Consumer trends will get a close look tomorrow, with Walmart a prime barometer of sentiment. Deere also reports this morning and could be an interesting barometer of a different sort for the U.S.

5:07manufacturing economy. Despite inflation and rising oil prices, recent manufacturing data hinted at improvement in a long-suffering area of the economy, and Deere is one of the largest manufacturers around, making a point of its strong commitment to manufacturing in the U.S. with dozens of facilities. Slumping farm income due to tariffs and higher oil prices could affect Deere's results this time out, though guidance matters too amid talk about a possible bottoming of the U.S. ag economy. Turning to monetary policy, Fed minutes yesterday from the April meeting revealed more Fed officials warning of the possible need for rate hikes should inflation advance further.

5:50That should have been a big surprise, considering three policymakers dissented in favor of removing accommodative language from the Fed's statement. The vast majority of participants noted an increased risk that inflation would take longer to return to the committee's 2 % objective than they had previously expected, the minutes said. Futures trading now factors in a nearly 45 % chance of at least one hike this year, according to the CME FedWatch tool. Treasury yields, meanwhile, fell sharply Wednesday as oil dropped amid hopes for progress on the war. A 20-year bond auction Wednesday saw decent demand following several tepid auctions last week.

6:33However, it wasn't a big auction. Other data is light ahead of the three-day U.S. holiday weekend, though there's some housing numbers and S &P preliminary global manufacturing this morning. April housing starts are seen falling to 1.42 million on an annual basis, according to consensus gathered by Briefing.com. Permits are seen edging up to 1.38 million. Starts had risen almost 11 % in March, month over month, but building permits declined by the same percentage. With building permits considered a key leading indicator, they arguably remain the number to focus on. Major indexes stormed back Wednesday to end a three-day losing streak.

7:19Volume that had trended lower earlier this month has turned higher the last couple of days to above normal levels at the New York Stock Exchange. Eight of 11 S &P 500 sectors ended higher Wednesday, led by consumer discretionary as yields fell and helped ease fears of higher borrowing costs weighing on shoppers. Cyclical sectors, including materials, industrials, and financials, all rose 1 % or more, while Infotech finished second to discretionary at 1.8%. In individual trading Wednesday, lows added 1 % after the retailer reported earnings that surpassed Wall Street's expectations. Sales at stores open a year or more, or same-store sales, rose 0.6%.

8:05Those also said it expects second-quarter earnings per share to fall 2 % year-over-year, below the fact-set consensus. Target fell nearly 4%, even as investors digested what looked like a solid quarter for the big-box retailer. Earnings rose more than expected, and Target raised guidance for revenue. Same-store sales rose 5.6 percent, and the company said in a press release that quarterly performance suggests its turnaround plan is working. Decisions related to that plan may have gotten investors nervous after an early session move higher. Toll Brothers jumped almost 10 percent after the builder, known for its luxury houses, reported earnings and revenue that beat estimates, despite an annual drop in delivered homes.

8:52The company raised the low end of its delivery guidance. Kava Group surged 3%, lifted by stronger year-over-year earnings and revenue, along with same-restaurant sales growth of almost 10 % for the fast-casual dining firm. The company lifted its fiscal 2026 same-restaurant growth estimate and raised its projection for net-new restaurant openings. Micron climbed 4.6%, even though rival Samsung reportedly settled a strike threat by its workers. Chips generally advanced Wednesday, led by Arm Holdings, and its nearly 15 % jump. The group appeared to gather steam from a Bank of America note raising its outlook for their server CPU market to$125 billion from$110 billion by 2030.

9:44Also, Bernstein initiated coverage of ARM with an outperform rating Intuit dropped almost 4 % after the company said it would eliminate 17 % of the company's global jobs While it's unclear if that was connected, shares of other software firms also fell perhaps reflecting concerns about the industry's competition from AI Earnings after the Bell Wednesday topped expectations while revenue met expectations, and the company guided for above-consensus results. As yields and oil fell, rate and inflation-sensitive names did an about-face Wednesday after sliding Tuesday. Airlines, cruise lines, homebuilders, and automakers generally gained ground.

10:31Apparel and sporting goods also rose after Target's solid earnings, with Nike, Gap, and Macy's climbing. Energy went the other way, with ExxonMobil and Chevron both down more than 3 % as oil slipped.

10:48The Dow Jones Industrial Average climbed 645.47 points Wednesday, or 1.31%, to 50 ,009.35. The S &P 500 index surged 79.36 points, or 1.08%, to 7 ,432.97, and the Nasdaq composite popped 399.65 points, or 1.55%, to 26 ,270.36. This has been the Schwab Market Update Podcast. To stay informed, visit www.schwab.com slash market update or follow us for free in your favorite podcasting app. And if you like what you've heard, please consider leaving us a rating or a review. It really helps new listeners find the show. Join us for another update tomorrow.

11:47For important disclosures, see the show notes and schwab.com slash market update podcast.