Nvidia Earnings and Fed Minutes Jolt Global Markets

Global markets swung sharply today as two forces collided: blockbuster earnings from :contentReference[oaicite:0]{index=0} and a cautious tone in the latest minutes from the :contentReference[oaicite:1]{index=1}. The result was a familiar pattern for 2026 — equities volatile, bond yields grinding higher, and investors forced to reassess how long rates will stay restrictive.

The core tension is straightforward: artificial intelligence is driving real earnings growth, but monetary policy remains a constraint on valuations.

Nvidia Extends the AI Trade

Nvidia reported quarterly revenue of $38.4 billion, up 72% year over year, driven by continued demand for AI accelerators. Data center revenue alone rose 81%, underscoring that hyperscalers are still spending aggressively on compute infrastructure.

Shares initially jumped more than 6% in after-hours trading before paring gains as the broader market digested the Fed minutes. The reaction highlights a critical shift: strong earnings are no longer enough on their own to sustain multiple expansion.

The :contentReference[oaicite:2]{index=2} remains up 9.2% year-to-date, with nearly half of that gain attributable to five mega-cap technology names. Market breadth has improved modestly in recent weeks, but leadership is still concentrated.

When one stock accounts for an outsized share of index performance, fundamentals matter — but positioning matters more.

Fed Minutes: No Rush to Cut

Minutes from the Federal Reserve’s January meeting showed policymakers remain concerned about sticky services inflation. While headline CPI has eased to 2.7%, core services excluding housing remains above 3.5%.

Officials reiterated that rate cuts will depend on “greater confidence” that inflation is sustainably moving toward the 2% target. Markets are now pricing in just two 25 basis point cuts for 2026, down from four at the start of the year.

The yield on the 10-year Treasury rose to 4.48%, its highest level in six weeks. Higher long-term yields compress equity valuations by increasing the discount rate applied to future earnings — a dynamic particularly relevant for high-growth technology stocks.

Oil and Geopolitics Add Pressure

Brent crude climbed to $87 per barrel amid renewed supply concerns in the Middle East and lower-than-expected U.S. inventory builds. Energy equities outperformed the broader market, helping offset weakness in rate-sensitive sectors such as utilities and real estate.

Rising oil prices complicate the Fed’s task. Energy feeds directly into headline inflation and indirectly into transportation and input costs. If crude stabilizes above $85, inflation expectations could drift higher again.

What Investors Should Watch

Three variables now dominate the macro narrative:

1. The trajectory of core services inflation
2. The sustainability of AI-driven capital expenditure
3. The behavior of long-end Treasury yields

If earnings growth continues to outpace rate pressure, equities can grind higher. But if yields push decisively above 4.5%, valuation compression could offset even strong profit growth.

The takeaway is not that the bull market is over. It is that we are in a regime where cash flows matter more than narratives, and where policy patience limits speculative excess. Investors should assume volatility is structural, not temporary.