Fed minutes ahead, Nvidia to report, OpenAI turmoil - what's moving markets

Economy MARKET_WATCH

U.S. futures inch down slightly, but stick relatively close to the flatline, as traders look ahead to the release of minutes from the Federal Reserve's November policy meeting and earnings from AI chipmaker Nvidia. The dramatic boardroom battle at OpenAI over the ouster of former boss Sam Altman rumbles on, with the majority of employees now threatening to take their talents elsewhere if he is not reinstated.

1. Futures mostly lower

U.S. stock futures hovered mostly below the flatline on Tuesday, as investors awaited impending minutes from the Federal Reserve's latest meeting and a trickle of corporate earnings.

By 04:44 ET (09:44 GMT), the Dow futures contract had shed 40 points or 0.1%, S&P 500 futures had lost 4 points or 0.1%, and Nasdaq 100 futures were broadly unchanged.

The main indices on Wall Street all finished solidly in the green in the prior session. The 30-stock Dow Jones Industrial Average gained 0.6% and the benchmark S&P 500 added 0.7%, while the tech-heavy Nasdaq Composite rose by 1.1% after touching an almost two-year high earlier on Monday.

Investors will be keeping tabs on minutes from the Fed's November gathering, when the U.S. central bank voted to leave interest rates steady at a range of 5.25% to 5.50%. Markets will likely be on the hunt for any insight into how officials see rates evolving in the coming months, particularly with recent data suggesting that the tighter policy may be helping to cool price growth in the world's largest economy.

The numbers have bolstered hopes that policymakers have finally finished a long-standing bout of rate hikes, while the chance that the Fed could begin to cut borrowing costs as early as May next year is also rising, according to Investing.com's Fed Rate Monitor Tool. But, in the near-term, traders widely expect the Fed to maintain rates at their current level when officials meet for the final time this year next month.

2. Turmoil at OpenAI

The majority of staffers at OpenAI have reportedly called for the reinstatement of Sam Altman, the artificial intelligence start-up's former chief executive who was ousted in a dramatic boardroom shake-up over the weekend.

According to multiple media reports, more than 700 of OpenAI's 770 employees have signed a letter threatening to quit if Altman is not given his job back, saying his dismissal had "undermined our mission and company." One of the surprising signees included chief scientist Ilya Sutskever, who had previously voted to remove Altman from the helm of the group behind the megapopular AI chatbot ChatGPT.

Meanwhile, early OpenAI investor Vinod Khosla has asked interim CEO Emmett Shear to quit "before he becomes the only employee." Venture capitalists who have stakes in the business are also considering legal action that could be taken against OpenAI's board, the Financial Times said, citing people with knowledge of their thinking.

But the FT reported that the board has yet to be persuaded and is willing to test whether employees would actually leave the company.

The ructions have thrust OpenAI, once celebrated as a leading figure in a recent surge in enthusiasm for AI, into a time of deep uncertainty. Microsoft (NASDAQ:MSFT), which has invested heavily in the group, has largely thrown its support behind Altman, offering to hire him and OpenAI co-founder Greg Brockman to head a new advanced AI research team.

However, speaking to CNBC, the tech giant's CEO Satya Nadella said that "something has to change" around the governance structure of OpenAI in the wake of the turmoil.

3. Nvidia's Asian suppliers gain ahead of earnings

Shares of Nvidia's (NASDAQ:NVDA) Asian suppliers rose on Tuesday as investors geared up for key quarterly earnings from the world’s most valuable chipmaker, as well as any more cues on AI-led demand, especially in China.

Japan’s Advantest Corp. (TYO:6857), which supplies chip testing equipment to Nvidia, rose 2.9%, while Taiwan Semiconductor Manufacturing Corp. (TW:2330), or TSMC, added 1.4% in Taiwan trade.

Japanese chipmaking equipment maker Tokyo Electron Ltd. (TYO:8035) climbed by 1.1%, while South Korea’s SK Hynix (KS:000660) and Samsung Electronics (KS:005930) edged up 0.5% and 0.1%, respectively. Japanese tech conglomerate SoftBank Group Corp. (TYO:9984), which has exposure to Nvidia through its Arm Holdings (NASDAQ:ARM) unit, added 0.9%.

Nvidia is set to report its September quarter results after the U.S. market closes on Tuesday. The firm, a major beneficiary of the AI boom, is expected to unveil another blockbuster revenue forecast.

4. U.S. seeking over $4 billion from Binance to end criminal probe - reports

The U.S. Department of Justice is seeking a more than $4 billion settlement to end a criminal investigation into the world's largest cryptocurrency exchange, according to media reports.

A resolution could come as soon as this month and include criminal charges being brought against Binance founder and chief executive Changpeng Zhao in the U.S., the reports said. The story was first reported by Bloomberg News.

Citing a source familiar with the matter, the Financial Times said that the investigation into Binance centers around possible bank fraud, money laundering and sanctions violations.

The DOJ probe marks a fresh legal challenge in the U.S. for Binance. Earlier this year, the U.S. Securities and Exchange Commission sued the company and Zhao, claiming they had carried out an "elaborate scheme to evade [...] federal securities laws." Binance has denied the allegations.

5. Oil rebound loses some steam

Oil prices fell Tuesday, handing back some of their recent gains, as traders displayed some caution ahead of a crucial OPEC+ meeting this weekend.

By 04:48 ET, the U.S. crude futures traded 0.6% lower at $77.39 a barrel, while the Brent contract dropped 0.5% to $81.91 per barrel.

Both contracts climbed about 2% on Monday, adding to Friday’s gains of around 4%, after Reuters reported that the Organization of the Petroleum Exporting Countries and its allies -- also known as OPEC+ -- was set to consider making additional oil supply cuts when it meets on Nov. 26.

Weekly U.S. inventory reports from the American Petroleum Institute and the Energy Information Administration are due later on Tuesday and Wednesday, respectively.

Source : Economy News by Investing.com / Nov 21, 2023

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