The Fuse
A sharply higher open today as NVIDIA delivered stellar earnings and is helping to push the markets significantly higher. That stock is only up about 3% but it has enough influence over the rest of the issues to bump up markets more than 1% (not the case for small caps or the industrials).
Interest Rates are barely budging this morning as the bond market seems satisfied where things are at for the moment. Of course, the Sept jobs report comes out today with more data and that may spur some activity. High yield remains a bouncing ball, fed futures now see only a 30% chance of a cut after news yesterday the November jobs report won’t be released until after the Fed meeting.
Stocks are on the moved as the NVIDIA earnings gift spills over. Europe was sharply higher, up .9% on STOXX with solid gains in Germany and France. FTSE in Englan was up .7%, the dollar climbed again up .1%. Gold is barely down as is silver, crude up a bit more than 1%. Stocks in Asia mixed with Japan ripping higher by 2.7%, Shanghai down .4% and Hong Kong flat. German bund yields rose slightly, US 10 yr treasury yields fell 1bp.
Earnings from NVIDIA were fabulous, beating across the board and guiding up with higher margins to come. Price targets were lifted for the stock all around but NVIDIA is still well off all time highs hit earlier this month. Walmart delivered strong numbers and is up modestly as welL and is rising modestly. Later tonight we hear from Intuit, Veeva, Gap, Elastic, Ross and a few others.
Stocks were tepid in front of NVIDIA earnings but may not be disappointed today. The company delivered on all metrics and is running on all cylinders, strong gross margins as they are selling GPU’s and Blackwell like hotcakes. This could stoke a nice rally for the bulls who may have caught the bears napping. No question the moderately oversold market was due for a bounce, but breadth was horrible yesterday and volume was not great. The early morning action is going to matter most today, we’ll have September job data coming up as well.
Breadth remains rancid as this indicator is deep into a sell signal. That may change today however after the strong earnings from NVIDIA is pushing tech stocks much higher today. We’ll have to see where things land after the closing bell, but suffice to say the rebound could be started here. New lows still dominating new highs, that has been a problem of late. Oscillators still in oversold territory so buyers may step up here.
Volume eased a bit so even as the markets were higher it could not be counted as an accumulation day. No matter, we could see a followthrough day here that has bigger turnover and that would spark a rally of sorts, there is a good chance of that happening before next week’s Thanksgiving holiday. Shortened trading and volatility selling. Next week turnover should relax, but this Friday probably prints big with options expiration day.
.
The Internals
What’s it mean?
For the markets being up those were ugly. VOLD was punk all day and closed poorly, that may change today. ADD was weak as was ADSPD, just no oomph in this market. TICKS were mostly red, the VIX did fall and may continue today, that’s a plus for the bulls. Put/calls remain well juiced, put buyers are around.
The Dynamite
Economic Data:
- Thursday:September labor report, existing home sales, leading indicators, fed speak
- Friday:More Fedspeak, SPX pmi, consumer sentiment
Earnings this week:
- Thursday:WMT, ZIM, SCVL, ALLT, WMG, VIPS, BULL, VEEV, CPRT, GAP, ESTC, UGI, INTU, TEN, POST, ROST
- Friday:BJS, VFS, MNSO, FRO, AZIA
Fed Watch:
Lots of concern that inflation is starting to run hot. That has spooked several fed members as they offer a ‘wait and see’ approach at the final meeting of the year next month. Can the committee resist the market’s desire to cut one more time? If we look at the 2 yr the market there is saying ‘slow your roll’ while fed funds still expect a cut, it’s only 50/50 now. We may see a change in the odds later in the week as more data is released.
Stocks to Watch
NVIDIA — We have to pay attention to the ‘King’ this week, reporting earnings after the close Wednesday. Lots of interest in this name but they can also pull up other semiconductor and AI-related names, too.
Bonds — It’s possible we get several data releases this week and that might move fixed income. The equity markets are mostly oversold here so any lack of bad news is going to stimulate buyers.
VIX — I’m watching the VIX closely this week along with nasdaq volatility, the VXN. We have seen a rise here as many are getting uncomfortable. Perhaps an opportunity is going to open up of the dip buyers step in. Else, just expect more selling to drop the market further.
