Inflation & NVIDIA: The Latest Market & Economy Updates

Wednesday, April 10, 2024, was eventful for both the US economy and the financial markets as the latest Consumer Price Index (CPI) report and tech giant NVIDIA (NVDA) took center stage. 

Here’s what you need to know about the latest updates:

US CPI: Is Inflation in the World’s Biggest Economy Still High?

US CPI is a widely anticipated report that can provide valuable information about both inflation and deflation in the world’s largest economy. It is also one of the Federal Reserve’s most referred-to gauges when determining monetary policy.

As such, the results of the CPI can generate market volatility and can have a direct impact on market sentiment. 

The latest CPI report was published on Wednesday, April 10, and gave an updated outlook on the inflation levels in March as consumers, Central Banks, and traders awaited to see whether or not inflation is nearing the Fed’s 2% and whether the Fed will cut interest rates in June. 

However, despite the expectations, the latest inflation report actually revealed that inflation is still stubbornly high in the US as CPI annually gained 3.5% in March, surpassing economists’ expectations and February’s 3.2% annual gain. On the other hand, the Core CPI (excluding energy and volatile food), which also came in above expectations, remained the same as in February at 3.8%. 

Whereas the course of the Fed’s monetary policy is yet to be determined, it may be worth noting that the latest FOMC Minutes (released yesterday) showed that most Fed members seem to lack confidence regarding the prospect of inflation nearing their 2% target anytime soon.  Additionally, according to some economists, “this firmer inflation print does put more pressure on policymakers to sustain likely a higher-for-longer monetary policy stance.” (Source: Yahoo Finance)

What Else Is Going on in the US?

Besides the inflation report, consumer and market participants alike may want to note the fact that the labour market is performing better in the US. It was revealed in a recent report on Friday, April 5, that unemployment was lowered while more jobs were added. 

Such figures can also affect the Fed’s upcoming monetary policy meetings this year.

The Fed’s Upcoming Rate Meetings in 2024

• April/May 30-1

• June 11-12

• July 30-31

• September 17-18

• November 6-7

• December 17-18

NVIDIA Loses Momentum?

Following a stellar performance in the past couple of months whereby NVIDIA hit record highs, the tech giant lost about 10% of its value on Tuesday, April 9, but recovered by Wednesday’s market close.

While the reasons for this weaker performance are yet to be discovered, the recent revelations by AI competitor Intel (INTC) could have put some pressure on NVIDIA. Intel revealed the Gaudi 3, its new AI chip, which powers generative AI tools through its large language models (LLM). According to Intel, this chip is set to be twice as power-efficient and runs AI models faster than the H100, which is NVIDIA’s most advanced GPU. Additionally, many note that AI demand may be experiencing a slowdown.

Despite this, it is important to note that many tech giants are integrating NVIDIA’s AI chips into their products. Meta (META), for example, will use about 350,000 of NVIDIA’s H100 GPUs by the end of this year, marking about 600,000 NVIDIA GPUs used, which makes it “one of the largest AI systems in the world.”

Moreover, some analysts posit that “NVIDIA is at the forefront of all things AI,” which further highlights this company’s potential prowess and growth. However, only time will tell what lies ahead for this tech leader.

Conclusion

Both the economy and the financial markets made notable headlines this week as NVIDIA and AI stocks shifted in different directions while the recent US CPI report revealed that inflation is still stubbornly high. What else should traders keep in mind?