Nasdaq Index, Dow Jones, S&P 500 News: All Eyes on Nvidia’s AI Potential

Highlights

• Stock futures rally as all eyes set on Nvidia’s upcoming quarterly earnings report.
• Wall Street sentiment teeters; Nvidia’s report could set the bullish or bearish course.
• Favorable earnings season, with 80% of S&P 500 firms beating analyst expectations.

Market Awaits Nvidia’s Earnings Amid Mixed Stock Futures

Stock futures:  blue chip Dow Jones, benchmark S&P 500 and tech-weighted Nasdaq showed signs of recovery Wednesday, with investors keenly awaiting quarterly results from Nvidia. The bounce-back comes on the heels of a varied trading session on Tuesday.

Big Names Reporting

The spotlight remains fixed on several big-name stocks that are set to reveal their quarterly numbers. Prominent among them is Nvidia, the chip giant. Alongside, leading retailers like Peloton, Foot Locker, Kohl’s, and Abercrombie & Fitch are expected to release their figures before the opening bell. Technology firms Nvidia and Snowflake will report after market close. Interestingly, Nvidia, despite a 3% drop in Tuesday’s session, boasts an impressive 212% rise year-to-date.

Earnings Season Overview

The current earnings season has been favorable, surpassing initial forecasts. Notably, approximately 80% of the S&P 500 companies, representing over 95% of those reporting, have exceeded analyst predictions.

Nvidia’s Anticipated Report

Analysts, as per Refinitiv, predict a significant year-on-year surge in both revenue and profit for Nvidia’s second quarter. The company’s stock performance has been remarkable, emerging as the best-performing S&P 500 stock of 2023. The market’s enthusiasm is largely driven by Nvidia’s promising strides in artificial intelligence (AI).

AI’s Broader Impact and Nvidia’s Potential Move

Ben Emons, from NewEdge Wealth, emphasized the strategic importance of Nvidia in the AI space, highlighting its potential to significantly influence economy-wide productivity. He points to the bond market, where expectations of AI’s impact are evident in real yields reflecting real GDP growth. Additionally, the options market indicates a possible 3% move in Nvidia shares following the earnings release.

Market Perspective and Upcoming Events

Wall Street remains cautious, considering the recent mixed outcomes. The S&P 500 witnessed a decline of over 4% this month. However, there was a silver lining on Wednesday with shares climbing by more than 1%. Retail and banking sectors faced challenges on Tuesday, with Dick’s Sporting Goods and Macy’s experiencing stock drops. Meanwhile, Lowe’s saw gains after surpassing analysts’ expectations. Besides company earnings, the market’s attention will be divided between economic data releases and the two-day Federal Reserve symposium in Jackson Hole starting Thursday. A speech by Fed Chair Jerome Powell on Friday is keenly anticipated.

Short-term Forecast:  Nvidia Dependent

Given the overall landscape, the market sentiment appears cautiously optimistic. The outcome of Nvidia’s earnings report could play a pivotal role in dictating the short-term direction – bullish or bearish.