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Spotlight on NVIDIA

Posted May 23, 2024 at 9:30 am
Patrick J. O’Hare

The stock market was waiting all week on the earnings report from NVIDIA (NVDA), and that report proved to be worth the wait (and the weight). The mega-cap, AI chip leader wowed yet again with its results and outlook, and put a cherry on top for shareholders with a 10-for-1 stock split announcement and 150% increase in its dividend.

Shares of NVDA are up 7% — and rightly so — as the company keeps taking a high bar of expectations and raising that bar itself. The momentum it continues to show has spilled over to other AI plays and has contributed to the bullish bias in the early going.

Currently, the S&P 500 futures are up 37 points and are trading 0.7% above fair value, the Nasdaq 100 futures are up 221 points and are trading 1.2% above fair value, and the Dow Jones Industrial Average futures are up 68 points and are trading 0.1% above fair value.

There will be new record highs to talk about today along with economic growth prospects.

The weekly initial and continuing jobless claims report fits in the soft landing/no landing camp. Meanwhile, JPMorgan Chase CEO Jamie Dimon told CNBC that a hard landing for the U.S. economy cannot be ruled out. To be clear, Mr. Dimon is not saying there is going to be a hard landing, only that it cannot be ruled out, which is what any risk manager should be contemplating.

In any case, it is fair to say that the stock market still remains very much in the soft landing/no landing camp.

With respect to the jobless claims report, it showed initial claims for the week ending May 18 decreasing by 8,000 to 215,000 ( consensus 219,000) and continuing jobless claims for the week ending May 11 increasing by 8,000 to 1.794 million.

The key takeaway from the report is that it covers the week in which the survey for the May unemployment report was conducted, and with the low — and encouraging — level for initial claims, economists are likely to be forecasting another relatively solid increase in nonfarm payrolls.

Some better than expected flash PMI readings out of the eurozone have also helped the soft landing narrative, but for the most part, today’s economic news has taken a backseat to yesterday’s news out of NVIDIA.

The latter has also overshadowed DuPont’s (DD) announcement that it will split into three, separate publicly-traded companies, News Corp. (NWSA) striking a multi-year agreement to bring News Corp content to OpenAI, Bloomberg reporting that the Department of Justice plans to file an antitrust lawsuit against Live Nation (LYV), and Ralph Lauren (RL) announcing better than expected fiscal Q4 earnings and issuing disappointing fiscal Q1 revenue guidance.

These news items have not escaped shareholders of the related stocks, but they are not influencers like NVIDIA is for the broader market.

Today’s trade will feed off NVIDIA’s performance, and the opening act promises to be uplifting.

Originally Posted May 23, 2024 – Spotlight on NVIDIA

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