Nvidia Powers the Nasdaq, Economic Data Encouraging, Debt Ceiling Progress? (May 26 Market Recap)
Indices
- Dow 33,093, -333 or -1.00%.
- Nasdaq 12,975, +218 or +1.72%.
- MSCI EAFE 2080.91, -50.68 or –2.37%.
- S&P 4,205, +24 or +0.57%.
- USD10Y 3.810%, +11.8bp or +3.19%.
- WTI Crude $72.87 bbl, +$1.20 or +1.67%.
Nvidia Powers the Nasdaq
On Wednesday, post-close, chipmaker Nvidia reported a blowout earnings report which included raising their revenue guidance by 50%. Nvidia traded up over 20% when markets opened on Thursday and helped power the Nasdaq to a 1.72% gain this week, easily outpacing the other indices. Nvidia cited strong demand for their high-end chips used in artificial intelligence applications.
Economic Data Encouraging
Initial Manufacturing and Services PMI for May beat expectations. Jobless claims fell for the second consecutive week. The second revision of Q1 GDP ticked higher to +1.3% vs the original +1.1% annualized growth rate. The April Durable Goods number was also better than expected. On the downside, the April Personal Consumption Expenditure ticked higher both month over month as well as year over year. After the report, futures markets reflected a 64% probability that the Fed will raise rates another 25bp at their June 14 meeting.
Debt Ceiling: Nothing Else Matters (still).
However, despite the good news in the technology sector as well as the good economic news, the specter of default continues to hang over the U.S. and global economies. Secretary Yellen updated Congress that the new default deadline is June 5. While reports have been increasing that the two sides are close to a deal, nothing as of this writing has been confirmed.
Next Week
It’s a full week of data in an abbreviated trading week as markets are closed on Monday in observance of Memorial Day. Employment data comes on Wednesday with ADP Private Payrolls and Friday’s Non-Farm Payrolls. Thursday sees services data released. Earnings continue to trickle out as the season winds down with only Salesforce, Nordstrom, and Broadcom of note.
Economic Calendar
- Monday – Market Closed in Observance of Memorial Day.
- Tuesday – May Consumer Confidence.
- Wednesday – May ADP Private Payrolls. April JOLTS. Earnings: Salesforce (CRM) and Nordstrom (JWN).
- Thursday – Initial Jobless Claims. May S&P and ISM U.S. Services PMI. Earnings: Broadcom (AVGO).
- Friday – May Non-Farm Payrolls.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
May 26 Daily Trading Recap…
Monday – Dow -140 to 33,286, Nasdaq +62 to 12,720, S&P +1 to 4,192, USD10Y +2.7bp to 3.719%
- Seven of eleven S&P sectors traded higher today, led by Communication Services, Real Estate, and Financials.
- Earnings: Zoom beat earnings and revenue estimates and guided their fiscal year higher; ZM traded up +2.94% in the regular session.
Tuesday – Dow –231 to 33,055, Nasdaq –160 to 12,560, S&P –47 to 4,145, USD10Y –2.1bp to 3.698%.
- Ten of eleven S&P sectors traded down, led lower by Materials, Technology, and Communication Services.
- May S&P Flash Services PMI beat at 55.1 vs expectations of 52.6 and last month’s 53.6 print.
- May S&P Flash Manufacturing PMI beat at 51.0 vs 50.0 expected and last month’s 50.2 print.
- Earnings: Lowe’s (LOW) easily beat revenue and earnings expectations but cut their full year forecast; LOW traded up 1.72% during the normal session. William Sonoma (WSM) beat their earnings numbers and reaffirmed their current year forecast; WSM traded down slightly during the regular session.
Wednesday – Dow -255 to 32,799, Nasdaq -76 to 12,484, S&P -30 to 4,115, USD10Y +2.1bp to 3.719%
- Ten of eleven S&P sectors traded down, led lower by Real Estate, Financials, and Industrials.
- FOMC minutes indicated that voting members were divided on whether additional rate cuts would be necessary to further rein inflation.
- Earnings: Nvidia (NVDA) absolutely crushed their numbers on strong demand for AI chips and guided their fiscal year revenues higher by 50%; NVDA traded up 26% after hours. Kohls (KSS) reported a surprise profit and revenue beat and reaffirmed their fiscal year forecast; KSS traded up 7% in the regular session.
Thursday – Dow -35 to 32,764, Nasdaq +213 to 12,698, S&P +36 to 4,151, USD10Y +9.5bp to 3.814%.
- Six of the eleven S&P sectors traded down, led lower by Energy, Utilities and Healthcare. Technology was a huge winner, up +4.45% on the strength of Nvidia’s blowout earnings.
- Jobless claims fell again to 229,000 vs the 250,000 forecast and last week’s revised lower print of 225,000 (vs 242,000 originally).
- The second reading of Q1 GDP improved slightly to an annualized growth rate of +1.3% up from the original +1.1% print.
- Earnings: Costco (COST) missed both earnings and revenue estimates as shoppers reduced spending on large ticket, higher margin items.
Friday – Dow +328 to 33,093, Nasdaq +277 to 12,975, S&P +54 to 4,205, USD10Y –0.4bp to 3.810%.
- Eight of eleven S&P sectors traded up today, led by Technology, Consumer Discretionary, and Communication Services.
- April Durable Goods Orders beat expectations easily, +1.1% vs –0.8%.
- April Personal Consumption Expenditure ticked higher to +0.4% month over month and +4.4% year over year vs +4.2% last month. Odds increased to 64% that the Fed will now raise another 25bp at their June meeting.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ETHE, GBTC, and TSLA.