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By Geoffrey Smith
Investing.com -- Nasdaq futures are underperforming again in premarket as stagflation hits Apple and NVIDIA. The U.S. will publish revised GDP figures for the first quarter, as well as jobless claims for last week, amid growing signs that the froth is starting to come off the labor market. Updates from Dollar General and Dollar Tree may shed light on how quickly consumers are scaling down their spending. Russia's central bank cut interest rates sharply as the risk of financial instability recedes, and the U.K. is set to raid energy producers in order to help poorer households. Here's what you need to know in financial markets on Thursday, 26th May.
1. Stagflation hits the market's darlings
Stagflation has reached Apple (NASDAQ:AAPL). The company expects not to increase production of its iPhones this year, according to a Bloomberg report citing unnamed suppliers. Lockdowns in China have disrupted production, while demand is stalling as consumers’ disposable income is eroded by inflation.
Bloomberg said Apple expects to ship some 220 million phones this year, rather than the 240 million consensus forecast of analysts. Apple stock fell 1.4% in premarket but is still comfortably above the 12-month low it hit last week.
Another market darling in the tech sector is having bigger problems in premarket. Chipmaker NVIDIA (NASDAQ:NVDA) warned that it lost $500 million in sales in China and Russia in the current quarter, as gaming and crypto mining demand slowed and orders for data center chips were canceled.
NVIDIA stock fell 5.3% in response. It still trades at 44 times trailing 12-month earnings, double Apple’s multiple.
2. U.S. GDP revision, jobless claims due
The U.S. will publish revised data for first-quarter gross domestic product at 8:30 AM ET (1230 GMT). Analysts expect only a marginal 0.1% upgrade from the preliminary reading of a 1.4% decline in the quarter.
The preliminary figure owed much to destocking but also showed signs of an incipient slowdown in consumer spending. Data since then have suggested that the slowdown is getting more severe as inflation starts to bite.
Of more timely nature will be weekly jobless claims, which are due at the same time. These have been trending up from historically low levels since early April and a further rise seems likely over the coming weeks as more and more companies come under pressure to improve profit margins. Initial claims are expected to have stayed around last week’s six-week high of 218,000.
3. Stocks set to open mostly higher; discounters' earnings eyed
U.S. stock markets are set to open mostly higher, despite the disappointments from Apple and NVIDIA, extending the gains they made after digesting the minutes of the Federal Reserve’s last meeting on Wednesday.