Wall Street Indices Near All-Time Highs Awaiting Nvidia Results:

Wall Street Indices Near All-Time Highs Awaiting Nvidia Results: At the end of the recent trading sessions,
the S&P 500 index closed at around 5308 points, reflecting market stability.
Simultaneously, Nvidia’s shares significantly rose due to analysts’ bullish expectations for further stock price increases.
On the other hand, Treasury bonds declined at the start of a busy week with new investment-grade bond issuances,
reflecting investor movements in the financial market.

 

Contents

Nvidia Results

S&P 500 Index

Maintaining Momentum

Reasons for Index Rise
Beneficiary Sectors

Stock Evaluations

The Next Step

Unlikely Earnings Scenario

 

 

 

Nvidia Results

The U.S. stock market indices hover near their all-time highs just days before Nvidia Corp,
one of the “Magnificent Seven” announces its results.
In a highly anticipated event for both Wall Street and the tech world, the chipmaker,
at the heart of the AI frenzy fueling the bull market, will report its earnings on Wednesday.
Investors seek numbers and guidance from CEO Jensen Huang to renew confidence in the insatiable demand for its chips.

Jay Woods from Freedom Capital Markets stated, “For the market to maintain momentum this week,
it might all come down to one stock: Nvidia.
” He added, “Well, that’s not entirely true, but the buzz around this
earnings event will be the talk of trading desks and media all week.”

 

S&P 500 Index

The S&P 500 index closed at around 5308 points.
Nvidia’s shares rose based on analysts’ bullish expectations.

Ethereum led a rise in cryptocurrency prices amid speculation that opposition is easing towards
an exchange-traded fund tracking the second-largest cryptocurrency.
JP Morgan Chase shares fell after Jamie Dimon said the bank would not repurchase many shares “at these prices.”

Another group of Federal Reserve spokespersons reiterated a wait-and-see approach regarding interest rates.
Treasury bonds fell at the start of a busy week with new investment-grade bond issuances
as companies rushed to sell bonds before the U.S. holiday weekend.
Ten-year bond yields rose by two basis points to 4.44%.

 

Maintaining Momentum

Chris Larkin from ETRADE at Morgan Stanley said the market faces a familiar question:
Can the Bulls maintain momentum?
He added, “Traders seemed pleased with last week’s economic numbers,
which were in a moderate range,” and noted that with a relatively light economic calendar this week due to a lack of significant data,
“earnings are expected to drive market discussions, with Nvidia topping a strong list of tech and retail names.”

 

 

 

 

Reasons for Index Rise

The S&P 500 index set several records in 2024, with U.S. stocks gaining $12 trillion since late October.
Part of this is due to hopes for a soft landing with the economy remaining relatively strong while inflation cools,
fueling bets that the Federal Reserve will cut interest rates this year.

The other part is enthusiasm for AI technology. The chip giant Nvidia is responsible for about a quarter of the index’s gains.
Besides Microsoft, Meta, and Alphabet (Google’s parent company), nearly 53% of the benchmark’s gains come from just five stocks.

Jason Trennert from Strategas Securities said, “Since companies like Cisco emerged in the late ’90s,
we can’t recall a single stock having such a massive impact on overall market expectations.”
He added that Nvidia’s earnings announcement last May “made even the most skeptical investors regarding AI’s future take notice.”

 

Beneficiary Sectors

For Jason Draho from UBS Global Management, Nvidia’s results could enhance AI tailwinds,
amplifying a buying wave driven by profit motives.
Shares of the world’s largest chipmaker by market value have risen about 5%
in the second quarter after climbing 82% in the year’s first three months.

As of Friday’s close, options markets were pricing in an 8.6% swing in Nvidia’s shares in the session after it announced its earnings.
David Donabedian from CIBC Private Wealth in the U.S. said,
“The company’s report will be scrutinized, and the bar may become too high to clear at some point.”

Bank of America strategists, led by Ohsung Kwon, considered that Nvidia, the darling of AI,
will no longer be the main stock-driving stock market gains as the benefits
of emerging technology expand to include other industries. Strategists see industries, commodities,
and utilities as some of the key beneficiaries.

 

Stock Evaluations

The recent rise in tech stocks has been supported by strong first-quarter reports and the anticipation of robust earnings,
but “valuations remain a concern,” according to strategists from RBC led by Lori Calvasina.
Saira Malik from Nuveen said, “With stock valuations already high, there may be less room for further increases,”
and suggested making additional portfolio allocations to sectors that have lagged behind the broader
market due to their cyclical nature and sensitivity to interest rates.

From her perspective, investors should pay attention to the likelihood of
a significant underweight position in U.S. small-cap stocks and listed real estate,
as these industries could rebound once the Federal Reserve finally shifts to a more accommodative monetary policy.

 

 

 

 

The Next Step

After experiencing the first decline of more than 5% this year, the S&P 500 has rebounded and is heading for its best month in 2024.
So, what’s the next step? History, though not guaranteed,
suggests that investors should stay the course by letting the winners win, according to Sam Stovall from CFRA.

He noted that during the 35 recovery periods following a decline since 1990,
which typically lasted 3.5 months before slipping into another decline of 5% or more,
The index rose by an average of 8.6%.
Furthermore, the three sectors that led the market during the recovery phase continued
to outperform the index in the post-recovery period, with an average rise of 10%,
outperforming the index 68% of the time, as Stovall said.

 

Unlikely Earnings Scenario

American earnings would need a sharp jump in the third and fourth quarters to meet analysts’ current full-year estimates.
This scenario is “unlikely” if economic data remains weak,
according to strategists from JPMorgan led by Mislav Matejka.
Michael Wilson from Morgan Stanley now expects the S&P to rise by 2% by June 2025,

a significant shift from his view that the benchmark index would fall by 15% by December.

The strategist, whose bearish predictions for 2023 failed to materialize as markets continued to rise,
finally capitulated, raising his target for the S&P to 5400 points from 4500 points. Wilson wrote,
“In the U.S., we expect strong earnings per share growth alongside modest multiple compression.”

According to strategists at HSBC led by Max Kettner, the rally in risk assets will last longer,
partly because short-term sentiment and positions have yet to send a warning signal.
Kettner added, “Our machine learning models suggest a stock market environment where everything is rising.”

 

 

Wall Street Indices Near All-Time Highs Awaiting Nvidia Results:

Major US stocks are falling and oil is rising slightly

Major US stocks are falling and oil is rising slightly

Major US stocks are falling and oil is rising slightly :The United States of America published its Federal Reserve report’s minutes, showing an intention to end the QE program soon. 

Evest follows all developments in the trading markets in the following report.

Topics:

Results of the Federal Reserve Board meeting’ minutes in September

Wall Street indices in the Green Zone

Wholesale declines in US stocks

Oil prices rise slightly

The Energy Information Management forecasts on oil prices

 

 

Results of the Federal Reserve Board meeting’ minutes in September

The minutes of the September meeting of the Federal Reserve System (FRS), released on Wednesday,
showed that leaders of the United States Central Bank are ready to begin ending the QE program in the coming months and complete it by mid-2022. 

Market participants viewed this as a positive signal, indicating that the Fed sees significant progress in the US economy’s recovery from the effects of the pandemic,
according to MarketWatch.

According to the protocol, Federal Reserve leaders discussed a rough plan that would reduce the volume of asset buybacks by $15 billion per month,
particularly US Treasury bonds – by $10 billion and mortgage bonds by $5 billion.

“Some Fed leaders have said they prefer to reduce ransom more quickly” – the record said.

The US Labor Department data, released on October 13,
showed that country’s consumer prices index (CPI) in September rose by 5.4% compared to the same month last year. 

Thus, inflation accelerated from 5.3% the previous month and was the highest in 13 years.
Analysts predicted it would remain at the August level at an average of 5.3%, according to Trading Economics.

Wall Street indices in the Green Zone 

The Dow Jones industrial index ended trading on Wednesday at the level of the previous session, and the Standard & Poor’s and Nasdaq composite indices rose by the end of the session.

The Dow Jones industrial index remained virtually unchanged on Wednesday and closed at 34377.81 points.

Standard & Poor’s 500 rose by 13.15 points (0.3%) to 4363.8. The Nasdaq Composite Index rose by 105.71 points (0.73%) to 14571.64.

US Treasury yields declined on Wednesday, affecting banks’ stocks, but supporting technology companies’ stocks.

The interest rate on the US 10-year Treasury bonds fell to 1.541% from 1.575%.

 

 

Wholesale declines in US stocks

JPMorgan Chase’s stock price declined by 2.6% on the basis of Wednesday’s trading after the bank’s third-quarter report was published.

JPMorgan’s net income in the fourth quarter rose by 24%, better than market expectations.

The Bank’s growth was due in particular to the cancellation of a potential loan loss provision of $2.1 billion,

but the Bank’s quarterly revenue rose by only 1.3%,worse than analysts’ expectations.

Citigroup, Bank of America and Goldman Sachs Group shares fell by 0.5%, 0.9% and 0.1%, respectively.

The US investment firm BlackRock’s stock rose by 3.8%.

It is the largest company in the world in terms of managed assets, with a net profit of 23% in the third quarter of 2021 and revenue of 16%.

Earnings excluding non-recurring factors were $10.95 per stock, exceeding analysts’ average of $9.57 per stock.

Delta Airlines, which also issued its quarterly earnings on Wednesday, declined by 5.8%.

The airline posted a net profit for the first time since the COVID-19 pandemic,

but warned that higher fuel prices would prevent it from continuing to make a profit in the fourth quarter.

Apple’s stock fell by 0.4% following a Bloomberg report that the company could reduce its plan to produce iPhone 13 smartphones in 2021 by 10 million units,

due to a shortage of semiconductor components.

Qualcomm’s stock rose by 1.7%.

The day before, the company announced that its board of directors had agreed to launch a new $10 billion stock buyback program.

 

 

Oil prices rise slightly

Oil prices resumed growth on Thursday after a slight decline the previous day.

The energy crisis in Europe and Asia continues to exert pressure on the market,

contributing to increased oil demand with a moderate increase in production by OPEC + countries.

The US oil reserve rose by 5.123 million barrels last week from 951 thousand barrels a week ago,

according to the American Petroleum Institute (API).

Official data from the US Energy Administration will be released later in the day.

The experts interviewed by Standard & Poor’s Global Platts expected the country’s oil reserves to decline last week by an average of 500 thousand barrels,

and gasoline – 400 thousand barrels, distillation products – 800 thousand barrels.

The cost of Brent crude futures for December on the London Stock Exchange ICE Futures on Thursday is $83.76 per barrel,

$0.58 (0.7%) higher than the closing price of the previous session. 

As a result of Wednesday’s trading, these futures fell $0.24 (0.3%) – to $83.18 per barrel.

The price of West Texas Intermediate crude futures for November in electronic trading on the New York Mercantile Exchange (NMX) is $80.97 per barrel,

$0.53 (0.66%) higher than the final value of the previous session.

The day before, these futures fell by $0.2 (0.3%) – to $80.44 per barrel.While API data indicate the largest weekly jump in U.S. oil reserves since March,

Citigroup analysts believe reserves will fall sharply by the end of the year as businesses shift from using significantly higher gas prices to oil. 

In their view, this could lead to a price jump of $90 per barrel.

On Wednesday, the Energy Information Administration (EIA) of the United States Department of Energy,

raised its forecast on the average price of Brent crude for the current year to $81 per barrel from $71 per barrel. 

The Energy Information Administration also raised its forecast on the average price of Brent and West Texas intermediate crude for 2022.