S&P 500 and Nasdaq 100 Post Record Highs on Nvidia’s Blowout Earnings

The S&P 500 Index ($SPX) (SPY) today is up +0.20%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.49%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.65%. 

US stock indexes today are mixed.  The S&P 500 and Nasdaq 100 posted new record highs, while the Dow Jones Industrials fell to a 1-week low.  Nvidia is up more than +8%, leading chip stocks higher after reporting stronger-than-expected quarterly earnings.  Nvidia’s blowout earnings boost market sentiment and expectations that the global artificial intelligence boom will continue. 

Generally positive Q1 earnings results are supportive of stocks.  Q1 earnings are expected to climb +7.1% y/y, well above the pre-earnings season estimate of +3.8%.  According to data compiled by Bloomberg Intelligence, about 81% of reporting S&P 500 companies have beaten Q1 earnings estimates. 

On the negative side, the 10-year T-note yield climbed to a 1-week high today after US weekly initial unemployment claims fell more than expected, a sign of labor market strength that dampens expectations of Fed rate cuts.

US weekly initial unemployment claims fell -8,00 to 215,000, showing a stronger labor market than expectations of 220,000.

The US Apr Chicago Fed national activity index fell -0.19 to -0.23, weaker than expectations of +0.13.

The markets are discounting the chances for a -25 bp rate cut at 5% for the June 11-12 FOMC meeting and 19% for the following meeting on July 30-31.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is up +0.60%.  China's Shanghai Composite fell to a 3-week low and closed down -1.33%.  Japan's Nikkei Stock Index closed up +1.26%. 

Interest Rates

June 10-year T-notes (ZNM24) today are down -10 ticks.  The 10-year T-note yield is up +4.5 bp at 4.467%nchanged at 4.420%.  June T-notes gave up overnight gains and fell to a 1-week low, and the 10-year T-note yield rose to a 1-week high of 4.475% after US weekly jobless claims fell more than expected, a sign of labor market strength that is hawkish for Fed policy. Also, today’s rally in the S&P 500 to a new all-time high reduces safe-haven demand for T-notes.   

European government bond yields today are mixed.  The 10-year German bund yield rose to a 3-week high of 2.577% and is up +3.0 bp at 2.564%.  The 10-year UK gilt yield fell back from a 2-1/2 week high of 4.277% and is down -1.2 bp at 4.221%.

The ECB reported that Eurozone negotiated wages in Q1 increased +4.7% y/y from +4.5% y/y in Q4, which matched a record.

The Eurozone May S&P manufacturing PMI rose +1.7 to a 15-month high of 47.4, stronger than expectations of 46.1.  The May S&P composite PMI rose +0.6 to 52.3, stronger than expectations of 52.0 and the fastest pace of expansion in a year.

US Stock Movers

Nvidia (NVDA) is up more than +8% to lead gainers in the Nasdaq 100 after reporting Q1 revenue of $26.0 billion, above the consensus of $24.69 billion, and forecasting Q2 revenue of $28.0 billion-plus or minus 2%, stronger than the consensus of $26.8 billion.  Other chip stocks are rallying on the news, with Super Micro Computer (SMCI) up more than +10% to lead gainers in the S&P 500.  Also, Western Digital (WDC) and Micron Technology (MU) are up more than +3%.  In addition, Advanced Micro Devices (AMD), Applied Materials (AMAT), Marvell Technology (MRVL), and Lam Research (LRCX) are up more than +2%. 

Dell Technologies (DELL) is up more than +8% after Evercore ISI added the stock to its tactical outperform list with a price target of $165.

News Corp (NWSA) is up more than +2% after announcing a multi-year agreement to bring News Corp news content to Open AI.

International Paper (IP) is up more than +2% after Jeffries upgraded the stock to buy from hold with a price target of $57.

Hewlett Packard Enterprise (HPE) is up more than +2% after Evercore ISI added the stock to its tactical outperform list.

Freshpet (FRPT) is up more than +2% after Redburn upgraded the stock to buy from neutral with a price target of $168. 

Medtronic Plc (MDT) is down more than -4% to lead losers in the S&P 500 after reporting Q4 adjusted EPS of $1.46 versus $1.57 y/y. 

GlobalFoundries (GFS) is down more than -8% to lead losers in the Nasdaq 100 after holder Mubadala Technology Investments offered $950 million of shares via Morgan Stanley and Bank of America Securities. 

Live Nation Entertainment (LYV) is down more than -3% after Bloomberg reported that the US Justice Department and a group of states will sue the company for antitrust violations related to Ticketmaster’s unrivaled control of concert ticket sales. 

VF Corp (VFC) is down more than -6% after reporting Q4 revenue of $2.37 billion, weaker than the consensus of $2.41 billion. 

Earnings Reports (5/23/2024)

BJ's Wholesale Club Holdings Inc (BJ), Deckers Outdoor Corp (DECK), Intuit Inc (INTU), Medtronic PLC (MDT), Ralph Lauren Corp (RL), Ross Stores Inc (ROST), Workday Inc (WDAY).

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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.