On May 21, during Tuesday trading hours, the U.S. stock market exhibited modest gains, reflecting an investor sentiment that remains cautious ahead of the Federal Reserve's minutes from its April meeting. Meanwhile, tech giant NVIDIA is set to release its earnings report this Wednesday, causing its stock to continue attracting attention and propelling the Nasdaq and S&P 500 indices to new heights in terms of closing records.

As markets closed that day, the Dow Jones Industrial Average experienced a rise of 66.22 points, which translates to an increase of 0.17%, closing at 39,872.99 points. The Nasdaq Composite climbed by 37.75 points (0.22%) to end at 16,832.62 points, while the S&P 500 saw an increase of 13.28 points, closing up by 0.25% at 5,321.41 points.

Statements made by several Federal Reserve officials on the same day reiterated their stance on maintaining elevated interest rates for a longer duration. For instance, Fed Governor Christopher Waller, in a speech prepared for the Peterson Institute for International Economics, highlighted the necessity of monitoring several months of strong inflation data before he would consider supporting a relaxation of the monetary policy stance, mainly if there is no stark weakening in the labor market.

Waller further dashed any speculation regarding the possibility of needing to raise interest rates once more to lower demand sufficiently to alleviate price pressures, referring to the latest inflation data as “reassuring.” He indicated that the chances of increasing rates again are “very low,” emphasizing a philosophy of precaution in monetary policy.

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He was echoed by Rafael Bostic, President of the Atlanta Federal Reserve, who advocated careful deliberations regarding when to start reducing interest rates to avoid triggering pent-up consumer and business spending, which could subsequently lead to a surge in inflation again. “For me, I’d rather wait a bit longer to ensure that doesn’t happen,” Bostic stated, although he still projected a decrease in U.S. inflation within the year, considering a rate cut appropriate in the fourth quarter.

Similarly, Vice Chair Michael Barr of the Fed expressed in an event hosted by the Dallas Fed that the higher-than-expected inflation readings in the first quarter did not bolster his confidence regarding a reduction in price pressures. He remarked that it meant they had to maintain current interest rates longer than previously anticipated and emphasized the importance of seeing more sustained evidence of progress in inflation before considering any changes to policy rates.

Additionally, a recent report from the Federal Reserve underscored that even as price pressures have waned, households across the U.S. felt the ongoing impacts of inflation heading into the end of 2023. Approximately 72% of adult respondents indicated that their financial situation over the past year was “fair,” marking the lowest level since 2016. The survey results spotlighted inflation as the foremost financial concern among Americans, with 65% of adults acknowledging that despite a slowing inflation trend during the reporting period, high prices had exacerbated their financial condition.

As the spotlight turns to NVIDIA, the company has sparked significant interest leading up to its earnings report, with analysts raising their price targets for its stock ahead of Wednesday's announcement. NVIDIA's shares closed up by 0.64% at $953.86, marking a record high and a total market valuation of $2.35 trillion. Analysts estimate the company's expected earnings per share to be $5.58, with projected quarterly revenues reaching $24.602 billion.

Investor anticipation surrounds NVIDIA largely due to surging demand for its AI chips—augmented by expectations that the company’s performance will remain robust, making it potentially difficult for the stock price to see a substantial uptick if earnings merely slightly exceed expectations. NVIDIA’s recent track record shows consistent earnings that have drastically surpassed market anticipations over the past several quarters.

Moreover, this quarterly report may have a ripple effect across broader market trends. According to UBS analyst Jason Draho, the historic highs recently achieved by U.S. stocks are significantly driven by a return to a “soft landing” narrative, with NVIDIA's upcoming quarterly report poised to influence advancements in artificial intelligence.

Based on data from options analysis firm Trade Alert, NVIDIA's options are predicted to experience volatility of up to 8.7% by Friday, equivalent to a market valuation of $200 billion. Such fluctuations reveal the tech sector's sensitivity to NVIDIA's performance and broader market trends.

On the flip side, electric vehicle manufacturer Li Auto saw its shares dip by 3.45%, attributed to a quarterly earnings report for Q1 2024 that fell short of expectations. The report indicated revenues of 25.6 billion yuan, reflecting a 36.4% increase year-on-year but a stark 38.6% decrease quarter-on-quarter. The company reported a net profit of 591 million yuan, down 36.7% year-on-year and down a staggering 89.7% quarter-on-quarter, translating to earnings per share of 0.56 yuan.

In the cybersecurity arena, Palo Alto Networks faced a decline in shares of 3.74%. The company projected that its revenue for the fourth quarter of fiscal 2024 would range between $2.15 billion and $2.17 billion, slightly below market expectations pegged at $2.16 billion.

On a brighter note, Macy's shares increased by 5.13%, as the company reported first-quarter earnings that surpassed expectations. Macy's highlighted early signs of success from its strategies aimed at profitability, thereby raising its annual earnings forecast.

Conversely, Chinese e-commerce giant JD.com saw a drop of 4.2% in its stock price amidst plans to issue convertible senior notes amounting to a total principal of $1.5 billion, maturing in 2029.

Meanwhile, in the commodities market, gold futures dropped by 0.5%, settling at $2425.90 per ounce. Market analysts shared that a rising U.S. dollar index was largely responsible for this dip, though steadfast demand for gold remained in the backdrop of the U.S. interest rate speculation and geopolitical risks. They noted that the decline was restricted.

In the previous week, gold prices established a new record high, with spot gold peaking at $2449.89. Nikos Kavalis, the managing director at Metals Focus, emphasized that since March, the overarching scenario hasn’t significantly altered, asserting that the global macroeconomic and geopolitical landscapes continue to render gold appealing as an investment.