U.S. Indices closed higher on Wednesday, with the Russell outperforming and the NASDAQ lagging. Sectors were predominantly firmer, with Energy the clear outperformer while Communication lagged. Tech was bid ahead of NVDA earnings after-hours. T-notes continued to steepen with focus on Fed independence, while Williams was somewhat dovish, but said he thinks it will be appropriate to reduce rates over time, and they will have to watch the data. The Dollar was flat but saw two-way price action with morning strength pared heading into the APAC session, driven by the fall in UST yields throughout the session. Elsewhere in FX, the Canadian Dollar outperformed on higher oil prices, while the Australian Dollar was bid after hotter-than-expected inflation. Energy prices settled in the green, supported by the increased likelihood Iran will be hit with snapback sanctions, while the EIA report was also bullish, and Hungary MOL Chief said the Druzbha pipeline could be restarted today or tomorrow in the best case, but even then it may not be running at full capacity. The reversal of the Dollar and Treasury Yields supported Gold prices into the closing bell. Eyes turn to NVDA earnings after-hours, the 2nd estimate of GDP, weekly jobless claims and Fed’s Waller on Thursday, and of monthly PCE on Friday. Williams, the New York Fed President somewhat reiterated recent remarks that a low neutral rate era appears “far from over”, noting that the Fed could reduce interest rates and still be somewhat restrictive. William views policy in a modestly restrictive position, and said goals are close to balance, but will have to watch the data. If the economy evolves as he hopes, Williams thinks that at some point, they need to move interest rates closer to neutral over time. On data, Williams said Initial Jobless Claims are low, supply/demand in the labour market and hiring are all slowing, and sees GDP at a 1.5% annual rate (vs Fed median 1.4%). Williams highlighted wage growth continues to be consistent with a solid labour market, and inflation is moderating towards 2% target. When asked about the breakeven rate on employment, he said it is hard to determine; the breakeven number is lower than usual, but he does not have a good estimate on a specific number. After the close we had the key earnings report from Nvidia. Here is what the company just reported for Q2:
- Adjusted EPS $1.05, beating estimates of $1.00 (NVIDIA benefited from a $180 million release of previously reserved H20 inventory, from approximately $650 million in unrestricted H20 sales to a customer outside of China.)
- Revenue $46.74 billion, +56% y/y, beating estimates of $46.23 billion
- Data center revenue $41.1 billion, +56% y/y, missing estimates of $41.29 billion; this was the second consecutive quarter in which data centers missed.
- Gaming revenue $4.3 billion, +49% y/y, beating estimates of $3.82 billion
- Professional Visualization revenue $601 million, +32% y/y, beating estimates of $532 million
- Automotive revenue $586 million, +69% y/y, missing estimate $592.7 million
Addressing the elephant in the room, NVDA said that there were no H20 sales to China-based customers in the second quarter, and the question whether there will be any sales in the future will likely be discussed on the call. NVIDIA also said that it benefited from a $180 million release of previously reserved H20 inventory, from approximately $650 million in unrestricted H20 sales to a customer outside of China. In his comments CEO Jensen Huang said that “Blackwell is the AI platform the world has been waiting for, delivering an exceptional generational leap — production of Blackwell Ultra is ramping at full speed, and demand is extraordinary.” He added that “NVIDIA NVLink rack-scale computing is revolutionary, arriving just in time as reasoning AI models drive orders-of-magnitude increases in training and inference performance. The AI race is on, and Blackwell is the platform at its center.”
NVDA also announced that while it returned $24.3 billion in stock repurchases and cash dividends in Q1, leaving it with $14.7 billion remaining under its share repurchase authorization, on August 26, 2025, the Board of Directors approved an additional $60.0 billion to the Company’s share repurchase authorization.
While the Q2 results were generally ok if not stellar (and data center missed), the company’s guidance came slightly on the weak side of the buyside expectations. Nvidia is trading 3% lower this morning but it has not affected the Futures Markets which are back trading unchanged from last night’s close. Elsewhere, Oil closed 0.75% lower while Gole ended Wednesday’s session with a gain of 0.3%.
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