The daily business briefing: May 25, 2023

Nvidia shares shot up by 25% in premarket trading Thursday, lifting chip stocks broadly, after the chipmaker forecast surging revenue. Nvidia said it expected about $11 billion in sales over the quarter ending in July. Nvidia is the biggest maker of the advanced chips required for new artificial intelligence technology, and unexpectedly strong demand for those chips fueled its performance. For the quarter that ended in April, Nvidia reported $1.09 in adjusted earnings per share, beating expectations of 92 cents, and revenue of $7.19 billion, surpassing the $6.52 billion analysts expected. "This is just the beginning of a paradigm-altering generative AI wave," Barclays analyst Blayne Curtis wrote in a note. "So far, it seems that Nvidia is the one capturing nearly all the economics."

The Federal Reserve released the minutes of its May meeting on Wednesday showing that the central bank's leaders agreed unanimously to lift rates, but split on whether to raise them again in June. Several Fed policy makers indicated that if the economy evolves as they expect, "then further policy firming after this meeting may not be necessary," the minutes said. Other Fed leaders said more hikes might be necessary because "progress returning inflation to 2% could continue to be unacceptably slow," the minutes said. The Fed raised its benchmark short-term rate by a quarter percentage point in May in, marking the 10th straight increase in its aggressive campaign to fight high inflation. The next meeting is in June.

President Biden and Republican negotiators held what the White House said were productive talks Wednesday on raising the debt ceiling to avert a catastrophic default. White House Press Secretary Karine Jean-Pierre said the two sides remain divided but a deal is possible before June 1, when the Treasury Department says the federal government will run short of money to pay all its bills. "If it keeps going in good faith, we can get to an agreement here," she said. House Speaker Kevin McCarthy said he "firmly" believe a deal would avert a default, but Fitch Ratings put the United States' AAA credit rating on watch. Democrats want to raise the $31.4 trillion debt ceiling without conditions. Republicans say any deal must include deep spending cuts.

U.S. stock futures got a boost early Thursday from Nvidia's stronger-than-expected guidance fueled by demand for AI chips, although investors remained concerned that Congress won't raise the debt ceiling in time to avert a catastrophic default. Futures tied to the S&P 500 and the tech-heavy Nasdaq were up 0.7% and 1.9% at 6:30 a.m. ET. Dow Jones Industrial Average futures were down 0.2%. The Dow's struggles came after Fitch Ratings put the United States' AAA rating on watch as the June 1 deadline to avert a default neared with no deal on raising the debt limit. The three main U.S. indexes fell on Wednesday. The Dow dropped 0.8% in its fourth straight down day. The S&P 500 and the Nasdaq fell 0.7% and 0.6%, respectively.

Target posted a statement on its website Wednesday saying it was removing some merchandise celebrating Pride Month from stores after a backlash that included threats against its workers. Target said it remained committed to celebrating the LGBTQ community but was doing what was necessary for workers' "sense of safety and well-being" on the job. "Given these volatile circumstances, we are making adjustments to our plans, including removing items that have been at the center of the most significant confrontational behavior," the company said. Reuters reported that the retail giant was pulling products created by the LGBTQ brand Abprallen. Target is also reviewing some transgender swimsuits. Conservative activists have criticized the company for selling "tuck-friendly" women's swimsuits that allow trans women to hide their genitalia.