NVIDIA Leads Tech Rally as S&P 500 Rebounds: Market Sentiment Analysis

NVIDIA Leads Tech Rally as S&P 500 Rebounds

The S&P 500 climbed on Monday, recovering from last week’s losses, with NVIDIA spearheading a tech sector rally. This rebound comes after the broad market index experienced its worst weekly performance since April.

NVIDIA’s Surge and AI Chip Developments

NVIDIA stock jumped 4%, reclaiming ground after an 8% decline last week. The chipmaker’s shares rose on reports of the company developing AI chips for the Chinese market. Several analysts raised price targets, forecasting further upside. Despite recent volatility, NVIDIA remains a standout performer, up 138% year-to-date.

Tech Sector Rebound

Other tech giants followed NVIDIA’s lead, with Meta Platforms, Alphabet, and Apple each gaining over 1%. This sector-wide recovery marks a shift from last week’s trend, where investors rotated out of large-cap tech in favor of smaller names.

Federal Reserve and Interest Rate Expectations

Traders are pricing in a 93% likelihood of a Federal Reserve interest rate cut at the September meeting. This anticipation is contributing to the tech sector’s renewed strength and overall market sentiment.

Political Landscape

President Joe Biden’s exit from the presidential race and endorsement of Vice President Kamala Harris has introduced new dynamics to the political landscape. Analysts are assessing the potential market impact of various election outcomes.

Other Notable Stock Movements

IQVIA Holdings saw a significant 5% increase following better-than-expected second-quarter earnings. The health tech company reported earnings of $2.64 per share on revenue of $3.81 billion, surpassing analyst expectations.

CrowdStrike continued its downward trend, dropping 11% and emerging as the S&P 500’s worst performer. This decline builds on last week’s 18% loss, triggered by a software update that caused a global IT outage.

Bank of America shares fell after Berkshire Hathaway sold approximately $1.48 billion of its stake. The sale reduced Berkshire’s position by 3.3%, though Bank of America remains its second-largest holding.

Verizon Communications saw a 3.4% decrease after missing quarterly revenue estimates. The telecom giant faced challenges due to slower phone upgrade rates among price-conscious U.S. customers.

Market Forecast

The tech sector’s resurgence, led by NVIDIA, points to a bullish short-term outlook. However, traders should remain vigilant of potential volatility stemming from political uncertainties and upcoming Federal Reserve decisions. The performance of NVIDIA and other tech stocks, along with interest rate expectations, will likely be key factors shaping market trends in the coming weeks.

Technical Analysis

The E-mini S&P 500 Index is trading higher on Monday, rebounding from a three-day setback. The price action suggests it has enough upside momentum to challege a short-term pivot at 5631.75. Trader reaction to this level should set the tone into the close.

Overtaking 4631.75 will indicate the buying is getting strong. However, the inability to sustain a rally over this level will indicate sellers are in control with a retest of last week’s low at 5542.00 likely, followed by the major 50-day moving average support at 5487.71.