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Why Is NVDA Falling? (And Is It A Problem for the Market?)

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What’s in Today’s Report:

  • Why Is NVDA Falling? (And Is It A Problem for the Market?)
  • EIA Update and Oil Market Analysis

Futures are slightly lower following several underwhelming earnings reports and ahead of important economic data.

Micron (MU) and Levi-Strauss (LEVI) missed earnings and are declining solidly pre-market and those disappointing results are weighing on futures.

Economically, it was a quiet night and none of the reports are moving markets.

Today focus will be on economic data and the key reports, in order of importance, are as follows: Jobless Claims (E: 236K), Durable Goods Orders (E: 0.0%), Final Q1 GDP (E: 1.4%) and Pending Home Sales (E: 1.9%).  Given some cautious commentary on the economy from corporate management (including this morning), markets will want to see solid data that meets or slightly exceeds expectations and if that’s the case, the broad markets should be able to rally (even despite some tech headwinds from MU).

Additionally, today is the first (and potentially only) Presidential Debate (9:00 p.m. ET) and the closer look at the two candidates’ policies could move markets on Friday.

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Investors will need to see economic data that remains goldilocks

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Investors will need to see economic data that remains goldilocks: Tom Essaye Quoted in SwissInfo.ch

US Futures Steady as Nvidia Results Grab Spotlight: Markets Wrap

“With stocks sitting on record highs investors will need to see economic data that remains ‘goldilocks,’ the absence of any hawkish Fed surprises, steady yields, good retailer earnings, and solid guidance from AI bellwether Nvidia to meaningfully advance beyond current levels,”  Tom Essaye at the Sevens Report said in a note to clients.  

Also, click here to view the full article published on May 22nd, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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Is Investor Sentiment Getting Too Bullish?

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How Important Is AI to This Market? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is Investor Sentiment Getting Too Bullish?
  • Why the FOMC Minutes Weren’t Hawkish
  • EIA Analysis and Oil Update

Futures are solidly higher following stronger than expected NVDA earnings and guidance.

NVDA results beat across the board as earnings, revenue and guidance all beat estimates while the company announced a 10:1 stock spilt and increased the dividend.  NVDA is up 6% pre-open and pushing futures higher.

Economically, EU and UK May flash PMIs were mixed but both above 50, importantly signaling economic expansion.

Today focus will switch back to economic data and the key report today will be the May Flash PMI (E: 51.0).  For now, investors still view “bad data as good for stocks” as it makes rate cuts more likely so a small miss vs. expectations should extend the early rally.  We also get the latest Jobless Claims (E: 220K) and again a small miss will be welcomed by investors.  Turning to the Fed, the surge of speakers subsides today as we only have one speaker, Bostic (3:00 p.m. ET) and he shouldn’t move markets.

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If Nvidia’s earnings are soft, you’ll see some weakness in tech

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If Nvidia’s earnings are soft, you’ll see some weakness in tech: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Why the Stock Market Can Rally, Even if Nvidia Earnings Disappoint

“I think if Nvidia’s earnings are soft, you’ll see some weakness in tech, especially, although I don’t think that a bad Nvidia earnings print carries with it the same danger that it would have seen in February or November,” Sevens Report Research’s Tom Essaye tells Barron’s.

“While a bad Nvidia print will be bad for tech and probably bad for the S&P 500, because tech is such a big weight, for things like the Dow, the Russell 1000, RSP (the equal-weight S&P 500), I don’t think it’s a derailing event,” Essaye says. “I’d probably be looking to buy any dip on that.”

Also, click here to view the full Barron’s article published on May 21st, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

It’ll be Very Hard for This Market to RallyIf you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

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How Important Is AI to This Market?

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How Important Is AI to This Market? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • How Important Is AI to This Market?
  • Chart: Key Levels to Watch in NVDA Today
  • Fed’s “SHED” Release Takeaways Support Soft Landing

Futures are mildly lower as UK core inflation data failed to “cool” as much as hoped in April while traders await NVDA earnings after the close today.

Economically, the UK’s Core CPI figure came in at 3.9% vs. (E) 3.7% y/y in April, down from 4.3% in March which was a mild disappointment for broader global disinflation hopes.

Looking into today’s session it is a fairly busy day from a catalyst standpoint as we will get the latest Existing Home Sales report (E: 4.195 million) later this morning while the Fed’s Goolsbee is scheduled to speak at 9:40 a.m. ET.

As we move into the afternoon traders will be watching the results of a 20-Yr Treasury Bond auction (1:00 p.m. ET) before waiting on the release of the latest FOMC meeting minutes (2:00 p.m. ET).

Finally, some late season earnings could move markets with two notable retailers releasing results in the premarket: TGT ($2.05), TJX ($0.87) before all eyes turn the widely anticipated release of NVDA earnings ($5.55) after the close.

Bottom line, with stocks sitting on record highs investors will need to see economic data that remains “goldilocks,” the absence of any hawkish Fed surprises (i.e. consideration of rate hikes), steady yields, good retailer earnings, and solid guidance from AI bellwether NVDA to meaningfully advance beyond current levels.

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How Nervous Are Investors Right Now?

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What’s in Today’s Report:

  • Sentiment Update – How Nervous Are Investors Right Now?
  • A Timely Chart: NVDA Falls to Target From Last Thursday’s Report

U.S. equity futures are tracking global markets higher after European economic data came in better than expected and traders optimistically look ahead to big-tech earnings.

The EU’s April PMI Composite Flash rose 1.1 points to 51.4 vs. (E) 50.8 thanks to a solid 52.9 Services sub-index print. The strong data is helping ease worries of stagflation and a weakening consumer which have been simmering so far in 2024.

Today, focus will be on economic data early with the PMI Composite Flash (E:51.9) release and New Home Sales (E: 670K) report due out this morning.

There are no Fed speakers today but the Treasury will hold a 2-Yr Note auction at 1:00 p.m. ET which could offer insight into any changes in Fed policy expectations (the risk to stocks is an auction with weak demand that sends the 2-Yr yield to-or-through 5%).

Earnings season also continues to pick up today with UPS ($1.33), GM ($2.06), LMT ($5.80), GE ($0.67), PEP ($1.52), and SHW ($2.25) reporting before the bell while TSLA ($0.49) and V ($2.43) will release results after the close.

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Nvidia Has Been The ‘Poster Child’ Of AI Enthusiasm

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Nvidia Has Been The ‘Poster Child’ Of AI Enthusiasm: Tom Essaye Quoted in Bloomberg Featured on Yahoo Finance

Tech Up in Late Hours on Nvidia’s Bullish Outlook: Markets Wrap

“Nvidia has been the ‘poster child’ of AI enthusiasm because NVDA makes the type of semiconductor chips that power generative AI and demand for those chips has gone through the roof,” said Tom Essaye, founder of The Sevens Report. “The AI-driven rally in the ‘Mag Seven’ is largely justified by the fact that they’re making a lot more money than they were previously.”

While Nvidia is the proverbial “picks and shovels” of the “AI gold rush”, other big-tech companies such as Microsoft Corp., Meta Platforms Inc., Alphabet Inc., Amazon.com Inc. and Apple Inc. have also seen large stock rallies as investors expect these companies to harness the power of generative AI to boost profits, Essaye noted.

“Has the AI mania gone too far and are we looking at a bubble situation?” Essaye said. “Based on what most of us think about typical bubbles, the answer is ‘no’ they are not in a bubble.”

Also, click here to view the full Bloomberg article featured on Yahoo Finance published on February 21st, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

Tech Stocks Pulled Bacl – Tom Essaye Quoted In Barron’s

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Hedging Up Ahead Of The Results: Tom Essaye Quoted in Barron’s

Tech Stocks Pulled Back. The Nasdaq Fell 0.9%.

“You’ve got arguably the most important stock in the whole market producing earnings tomorrow, so I think that you’re just seeing some people reduce a little bit of exposure into that earnings print on the chance that perhaps it isn’t as fantastic as everybody expects it to be,” Sevens Report Research’s Tom Essaye told Barron’s in a phone interview.

Essaye said that last Friday’s selling flowed through to today as traders expressed worries that inflation isn’t going to come down as fast as they were previously pricing in.

“I don’t think it means a lot to be honest,” Essaye says. “Because if Nvidia posts good earnings tomorrow, all this is going to be undone relatively quickly.”

Also, click here to view the full Barron’s article published on February 21st, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

It’ll be Very Hard for This Market to Rally

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

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Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

What Blowout NVDA Earnings Mean for Markets

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What Blowout NVDA Earnings Mean for Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Blowout NVDA Earnings Mean for Markets

Futures are sharply higher thanks to stronger than expected NVDA earnings (stock up 14% pre-market) as Nasdaq futures surge by more than 2%.

NVDA results beat on revenue, earnings and guidance and global markets are higher on renewed AI enthusiasm.

Economically, EU and UK flash PMIs were very slightly better than expected but aren’t moving markets.

Today focus will shift back to economic data and the notable reports today are Jobless Claims (E: 216K), February Flash PMIs (E: 51.4) and Existing Home Sales (E: 3.98 M).  The more Goldilocks the data, the better for markets and the key remains Treasury yields.  If yields rise in response to the data, look for a headwind on stocks to push back on the NVDA led rally.

There are also multiple Fed speakers today including Jefferson, Harker, Kashkari, Cook & Waller but barring a major surprise, they shouldn’t move markets (Fed messaging has been very consistent lately:  Inflation is receding, but they need more proof before cutting rates which means a June cut is most likely at this point).

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Why Didn’t NVDA Earnings Spark A Rally?

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What’s in Today’s Report:

  • Why Didn’t NVDA Earnings Spark A Rally?

Futures are bouncing modestly following a quiet night of news and as investors look ahead to Powell’s speech later this morning.

EU economic data was soft again overnight, as German IFO Business Expectations missed estimates (82.6 vs. (E) 83.6) and added to the list of disappointing economic reports this week.

Today focus will be on Powell’s speech (10:00 a.m. ET) and if Powell’s tone implies “higher for longer” on rates, that will boost Treasury yields and pressure stocks.  Conversely, if he talks about being “patient” with the 2% inflation target, that will be seen as dovish.

Away from Powell, the only notable reports are Consumer Sentiment (E: 71.2) and the One-Year Inflation Expectations (E: 3.3%) and Five-year Inflation Expectations (E: 2.9%).   If inflation expectations are solidly under estimates, that’ll be a mild positive for markets.