Can Nvidia Do It Again?

What happens when the stocks that carried the rally begin to look expensive at the same time bonds start flashing warning signs? That is the uncomfortable setup facing U.S. equities this Tuesday. The pressure is most visible in chip stocks. Nvidia is down again before the open, on track for a third straight decline, just one day before it reports results. Micron, Seagate, and Western Digital are also sliding after big recent gains. The chip trade has been one of the market's favorite stories this year. But favorite stories can become crowded stories.

The bond market is the reason this sell-off feels larger than a simple round of profit-taking. Treasury yields eased a bit today, with the 10-year yield around 4.6%, but only after a sharp selloff that pushed long-term borrowing costs to uncomfortable levels. The 30-year Treasury yield recently moved above 5%, while the 10-year reached its highest level since February 2025. Investors are closely watching because higher yields make expensive growth stocks harder to justify.

Tech stocks, especially chipmakers tied to artificial intelligence, are priced on large future profits. When bond yields rise, those future profits are worth less in today's terms. That is the dull math behind a lot of dramatic market moves. Nvidia can still be a remarkable company and still be vulnerable to a repricing. The same is true for the broader semiconductor sector.

Nvidia's earnings on Wednesday evening will therefore matter far beyond one company (as usual). Investors are looking for proof that AI demand remains strong enough to support the valuations that have spread across the chip sector. The company has become the market's unofficial AI referee. If Nvidia delivers, bulls will argue that the sell-off was just a nervous pause. If it disappoints, or even if it merely sounds less dazzling than expected, investors may decide that the AI trade needs a little less poetry and a little more accounting.

The pressure is not limited to chips. The Nasdaq already fell on Friday and Monday, a rare two-day losing streak by recent standards. That tells us something about how forgiving this market has been. Investors have not abandoned risk. Software names such as Workday, Atlassian, Intuit, Zscaler, and ServiceNow are still finding buyers. But the market is becoming more selective, which is what usually happens when money stops feeling quite so free.

The bigger problem is inflation. Oil prices pulled back today, but Brent crude remains above $110 a barrel. That is still high enough to keep investors worried about energy feeding into prices across the economy. The Middle East conflict remains central to that risk. Trump said he called off a planned strike on Iran after leaders from Qatar, Saudi Arabia, and the United Arab Emirates urged more time for negotiations. That may have helped cool oil prices for now.

There are other tests coming. Walmart's earnings this week should offer a clearer view of the American consumer, especially with energy costs high and household budgets under pressure. The Home Depot has already shown the mixed picture, reporting higher revenue but lower adjusted earnings. Pending home sales are expected to rise, but housing remains highly sensitive to rates. A market can tolerate many things, but it is less patient when mortgages, oil, and Treasury yields all decide to become part of the conversation.

The most important thing about today's session is that it shows how dependent the rally has become on a narrow group of winners and a friendly rate backdrop. When chip stocks wobble and bonds growl, the market suddenly looks less invincible. Nvidia may yet restore confidence tomorrow.

Today's economic highlights:

Today's agenda includes: in Australia, the Westpac Consumer Confidence Index, the Westpac Consumer Confidence Change, the RBA Hunter Speech, and the RBA Meeting Minutes; in the United Kingdom, Average Earnings including Bonus, Employment Change, Unemployment Rate, and the BoE Breeden Speech; in Spain, the Balance of Trade; in the Euro Area, the Balance of Trade; in China, the FDI Year-to-Date YoY; in Canada, the Monthly Inflation Rate, Core Inflation Rate YoY, Annual Inflation Rate, and the New Housing Price Index MoM; in the United States, the Fed Waller Speech, Pending Home Sales MoM and YoY, and the API Crude Oil Stock Change. See the full calendar here.

• Dollar index: 99.230
• Gold: $4,538
• Crude Oil (BRENT): $110.81 (WTI) $103.78
• United States 10 years: 4.61%
• BITCOIN: $76,692

In corporate news:

• AT&T reaffirmed its second-quarter and long-term outlook, including $4.0 billion to $4.5 billion in expected Q2 free cash flow and plans to return more than $45 billion to shareholders from 2026 to 2028.
• Bank of America and Lazard are advising Fraikin Group's owners on a potential sale that could value the French truck-rental firm at up to €3 billion.
• Estee Lauder said talks with Puig over a possible business combination are still ongoing, but no deal has been announced.
• Anthropic has begun allowing Mythos users to share cybersecurity threat information more broadly after initially restricting disclosure under confidentiality agreements.
• KKR will sell its full stake in Kokusai Electric, with Nomura Securities expected to temporarily become the company's principal shareholder before reselling the shares to investors.
• Tapestry expects about 70% of its growth in the coming years to come from international markets, with Coach expansion focused on China and Europe.
• The New York Times sued the Pentagon again over a policy requiring journalists to have official escorts during Pentagon visits.
• ConocoPhillips said its gas joint ventures in Qatar may face delays of months, not years, despite LNG supply disruption linked to the Iran war.
• Onto Innovation priced an upsized $1.3 billion convertible-note offering, partly to fund share repurchases and potentially help finance its planned stake purchase in Rigaku.
• Merck's Ebola Zaire vaccine Ervebo may be considered by international health experts as a possible option against the Bundibugyo Ebola outbreak, despite no approved vaccine for that strain.
• Blackstone and Google formed a U.S.-based AI data-center joint venture with an initial $5 billion equity commitment from Blackstone.
• Chubb's INA Holdings unit priced a $1 billion senior-notes offering for general corporate purposes, including possible debt repayment.
• Google and Blackstone are teaming up to compete with CoreWeave.
• Meta is rolling out new features on its AI glasses.
• Ford is in talks to supply military trucks in Europe and North America.
• The CEO of Nvidia, Jensen Huang, expects the Chinese authorities to eventually authorise the import of artificial intelligence chips from the United States.
• Dell Technologies is rolling out production-ready agent-based AI, from the workstation to the data centre.
• Apple has announced a special event at Apple Park on 8 June.
• AI chip startup Tenstorrent has attracted interest from Intel and Qualcomm with a view to a takeover, according to Bloomberg.
• Analog Devices is reportedly set to acquire Empower for $1.5 billion, according to Bloomberg.
• Today's key earnings reports: The Home Depot, Keysight

Analyst Recommendations:

• American Tower Corporation: Bernstein upgrades to outperform from market perform with a target price of USD 207.
• Crowdstrike Holdings, Inc.: DZ Bank AG Research downgrades to sell from buy and raises the target price from USD 490 to USD 500.
• Fortinet, Inc.: DZ Bank AG Research downgrades to hold from buy and raises the target price from USD 115 to USD 125.
• Jazz Pharmaceuticals Plc: UBS upgrades to buy from neutral with a price target raised from USD 188 to USD 307.
• Mongodb, Inc.: Zacks upgrades to neutral from underperform with a price target raised from USD 220 to USD 328.
• Philip Morris International, Inc.: CITIC Securities Co Ltd upgrades to buy from add.
• Starbucks Corporation: Zacks upgrades to outperform from neutral with a price target raised from USD 111 to USD 123.
• The Hanover Insurance Group, Inc.: BMO Capital Markets downgrades to market perform from outperform and raises the target price from USD 194 to USD 203.
• Viking Holdings Ltd: UBS upgrades to buy from under review with a price target raised from USD 83 to USD 100.
• Applied Materials, Inc.: Rothschild & Co Redburn maintains its neutral recommendation and raises the target price from USD 355 to USD 450.
• Cisco Systems, Inc.: Argus Research Company maintains its buy recommendation and raises the target price from USD 100 to USD 150.
• Elf Beauty: Piper Sandler & Co maintains its neutral recommendation and reduces the target price from USD 85 to USD 60.
• Norwegian Cruise Line Holdings Ltd.: UBS maintains its neutral recommendation and reduces the target price from USD 22 to USD 17.
• Palo Alto Networks, Inc.: Capital One Securities maintains its equalweight recommendation and raises the target price from USD 168 to USD 248.
• Sandisk Corporation: Citi maintains its buy recommendation and raises the target price from USD 1300 to USD 2025.
• Zscaler, Inc.: Capital One Securities maintains its overweight recommendation and raises the target price from USD 140 to USD 184.