Investing.com - U.S. stock futures traded in a mixed fashion Thursday, with Nvidia's results weighing on the tech sector. Tesla's sales in Europe continued to slump in July, while doubts have emerged about the trade deal between Japan and the U.S. after Tokyo's main negotiator cancels a trip to Washington.
1. Nvidia retreats amid China uncertainty
Nvidia (NASDAQ:NVDA) delivered strong quarterly results after the market close Wednesday, with the chip designer and AI bellwether reporting a beat to analysts' estimates and forecasting third-quarter revenue that was higher than Wall Street estimates.
However, a miss on data centre revenue and questions over China forecasts caused investors to question the company's elevated valuation, resulting in its shares sliding in after-hours trading.
The stock dip removed around $110 billion from Nvidia's $4.4 trillion market capitalization.
Nvidia's second-quarter earnings - $1.04 per share- beat expectations of $1.01, as did revenue, at $46.7 billion, while it forecast current quarter revenue of $54 billion, plus or minus 2%, which is higher than expectations of $52.76 billion.
But Nvidia's data center revenue, which is by far its biggest breadwinner, came in at $41.1 billion, missing estimates of $41.34 billion. The miss largely stemmed from Nvidia selling no H20 chips in China during the quarter.
CEO Jensen Huang expects permission to restart selling Nvidia’s chips to China after striking a deal with U.S. President Donald Trump to pay commissions to the U.S. government. But with no formal U.S. rules in place and questions about whether Chinese regulators will discourage purchases of Nvidia chips, the AI market bellwether excluded potential China sales from the forecast for the current quarter.
Nvidia CFO Colette Kress said the company will ship between $2 billion and $5 billion in H20 revenue in the current quarter if geopolitical issues were to subside. But the outlook on China still remained highly uncertain.
2. U.S. futures mixed; Nvidia weighs on tech sector
U.S. stock futures traded in a mixed fashion Thursday, with the tech-heavy Nasdaq underperforming after the release of results from AI darling Nvidia.
At 02:55 ET (06:55 GMT), the S&P 500 futures traded 2 points, or 0.1%, higher and Dow futures rose 127 points, or 0.3%, while Nasdaq 100 futures dropped 17 points, or 0.1%.
The major indices enjoyed a winning session Wednesday, with the broad-based S&P 500 hitting a record close. They are on pace to record monthly gains, as the S&P 500 and the NASDAQ Composite are each up more than 2%, while the 30-stock Dow Jones Industrial Average is up more than 3% in the period.
Apart from Nvidia's results, investors will also digest numbers from the likes of Snowflake (NYSE:SNOW) and NetApp (NASDAQ:NTAP), while the economic data calendar includes the release of weekly initial jobless claims and gross domestic product growth for the second quarter.
3. Tesla suffers 40% drop in European sales in July
Tesla's (NASDAQ:TSLA) sales and market share in Europe fell sharply in July, data from the European Automobile Manufacturers' Association showed on Thursday, even as broader electric vehicle sales in the region continued to increase.
Tesla's sales lagged those of Chinese rival BYD, which was included in the monthly sales data for the first time. The latter also seized a greater market share than Tesla.
Tesla's total new car registrations in the European Union, the Europe Free Trade Association, and in the U.K., slid just over 40% year-on-year, ACEA data showed.
The ACEA is a group of 15 European automakers that acts as the main lobbying and standards group for the bloc's automobile industry.
Tesla's market share in the region shrank further to 0.8% from 1.4% year-on-year, while its January-July sales declined by 33.6% from the same period last year.
The drop came even as total battery EV sales in Europe surged 33.6% in July. The sector now represents about 15.6% of the European car market, behind the 28.3% share held by petrol vehicles and 34.7% share held by hybrid EVs.
Tesla's updated Model Y, released earlier this year, has made little impact on its sales, while rival offerings from European automakers, who have jumped on the EV bandwagon in recent years, also provided increased competition.
Tesla's brand image has taken a hit in Europe, hurt by CEO Elon Musk's endorsement of U.S. President Donald Trump, as well as his associations with a German far right party.
4. Japan's trade negotiator cancels U.S. visit
Japan's top trade negotiator, Ryosei Akazawa, has cancelled a visit to the United States at the last minute, delaying talks designed to finalise a $550 billion investment package offered by Tokyo in exchange for relief on punishing tariffs.
"It was found that there are points that need to be discussed at the administrative level during coordination with the American side. Therefore, the trip has been cancelled," Japan's government spokesperson Yoshimasa Hayashi told reporters on Thursday.
Washington and Tokyo agreed in July to set a reduced 15% tariff on imports from Japan in exchange for the package of U.S.-bound investment through government-backed loans and guarantees, but details of its contents remain unclear.
While Trump has touted the package as "our money to invest" and said the U.S. would retain 90% of the profits earned, Japanese officials have stressed that the investments will be determined based on whether they will also benefit Japan.
5. Crude drops further
Oil prices fell on expectations for lower U.S. fuel demand as the summer driving season draws near, even after a sharp drop in U.S. crude inventories.
At 02:55 ET, Brent futures slipped 0.5% to $66.91 a barrel, and U.S. West Texas Intermediate crude futures fell 0.9% to $63.59 a barrel.
Both contracts climbed in the prior session after the Energy Information Administration reported that U.S. crude inventories fell by 2.4 million barrels in the week ended August 22, a larger draw than the 1.9 million barrels forecast by analysts.
The drop signaled strong demand ahead of the upcoming U.S. Labor Day long weekend. However, this typically marks the unofficial end of the summer driving season and the onset of lower U.S. demand.