For all the hemming and hawing about the stark reversal seen in shares of NVIDIA (NVDA) last Friday, the fact of the matter is that the S&P 500 achieved a record closing high yesterday. It did so helped in large part by NVIDIA, which cruised to a casual 7.2% gain.
Other mega-cap stocks were in demand, too, driving the market-cap weighted S&P 500 to a 1.1% gain. The equal-weighted S&P 500 was more subdued, advancing only 0.3%, but that was good for a record high close as well.
In brief, the inclination to buy into weakness hasn’t been stifled yet. One could argue that it might have been emboldened by yesterday’s action knowing that the CPI report wasn’t entirely market friendly from a headline standpoint.
The Treasury market seemed to pick up on that idea. The inflation-sensitive 10-yr note saw its yield jump five basis points to 4.16% and it has pressed higher to 4.18% this morning in front of the $22 billion 30-yr bond auction at 1:00 p.m. ET. Still, the stock market was governed more by momentum forces and the dismissive thought that inflation readings in coming months are bound to look much better as readings for the lagging shelter cost index turn more favorable.
As it is said, time will tell, but the stock market didn’t seem to waste much time yesterday worrying about inflation. It isn’t necessarily worrying about much this morning, but it also hasn’t been energized by much this morning either.
Currently, the S&P 500 futures are down three points and are trading fractionally below fair value, the Nasdaq 100 futures are down 62 points and are trading 0.3% below fair value, and the Dow Jones Industrial Average futures are up 27 points and are trading 0.1% above fair value.
There isn’t any economic data of note out today, but Thursday’s calendar features the February Retail Sales and February Producer Price Index reports. Both are important for their own reasons, but the PPI data will help set expectations for the PCE Price Index, which is the Fed’s preferred inflation gauge, so participants might be choosing to move more deliberately in front of that report.
Notably, NVIDIA had been up more than 1.0% in pre-market trading, but now it is indicated to open 1.3% lower. That reversal, and a 2.4% drop in Tesla (TSLA) after Wells Fargo lowered its rating to Underweight from Equal Weight, has put some added pressure on the Nasdaq 100 futures.
What happens in the pre-market, though, doesn’t always stay in the pre-market. Accordingly, participants will be keeping a close eye on NVIDIA’s performance and that of the broader market in response to NVIDIA’s performance. To this point, the broader market has fared well amid NVIDIA’s roller-coaster ride.
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Originally Posted March 13, 2024 – Market rides along NVIDIA’s roller-coaster ride
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