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Nvidia Earnings Rescue the Bull Market, Again
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-8:45

Nvidia Earnings Rescue the Bull Market, Again

NVDA results blew by analyst estimates and the stock bounced overnight…
Transcript

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Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Thursday, Feb. 22. The Bottom Line segment of today’s podcast starts at (4:05) for listeners who want to skip ahead.

State of Play

After the close came the event we had all been waiting for, Nvidia (NVDA 0.00%↑) earnings. The company beat estimates across the board and the stock moved higher overnight as a result, by 14% at last check. As we look at our board of indicators at 0640, it looks like we are in for a broad rally in risk assets, specifically equities — led by tech, predictably enough:

  • Stock index futures are gaining ground, led by the Nasdaq which is up 2.2%. S&P 500 futures are up 1.4%;

  • Commodities are flat, with WTI crude oil unchanged at $78/barrel and copper not moving from the break-even point either;

  • Bonds aren’t moving either. The 2-year is up 2bps to 4.67% with the 10-year down 2bps to 4.31%.

Earnings

More of these on the way, though none as massive as NVDA. But several worth paying attention to nonetheless. This morning we’ll hear from Wayfair (W 0.00%↑), Fiver (FVRR 0.00%↑), and Nikola (NKLA 0.00%↑).

After the close at 1600, Block (SQ 0.00%↑), Carvana (CVNA 0.00%↑), MercadoLibre (MELI 0.00%↑), Booking (BKNG 0.00%↑), and LiveNation (LYV 0.00%↑) report.

Economic Data

It’s Thursday so we’ll get initial jobless claims at 0830. Economists expect 218,000 new claims, an increase from the 212,000 recorded last week and right in line with the four-week average.

S&P Global publishes Flash PMIs at 0945. Manufacturing PMIs are expected to clock in at 50.5, effectively unchanged since last month’s 50.7. Services PMIs are also expected to be unchanged, at 52.4 versus 52.5 last month.

The Bottom Line©️

Nvidia to the rescue, again. Just when investors were starting to maybe doubt the AI-based bull narrative, NVDA earnings come through to douse the fire with gasoline. As a result the party is in full effect, with all tech names running up: AMD (AMD 0.00%↑), Intel (INTC 0.00%↑), Amazon (AMZN 0.00%↑), even Tesla (TSLA 0.00%↑) are seeing the largest gains among S&P stocks in the pre-market. So too are Carnival Cruise Lines (CCL 0.00%↑) and Royal Caribbean (RCL 0.00%↑) speaking of risk-sensitive stocks (turns out that is due to RCL earnings, which is actually a solid economic reason for risk assets to rally).

To gauge whether this has staying power you’re going to want to eventually see other asset classes move higher as well. Things like oil and copper, specifically. But for now the narrative has clearly been reclaimed by bulls. If you were long: congrats. If you doubted Nvidia, well, better luck next time. The Contrarian is happy for the bulls but equally happy to have sit this one out. Don’t fight the tape. If the market is telling us it’s a raging bull market for AI and tech, then that is what we’ve got.

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The daily podcast discusses the major market activity and economic data release schedule for the day ahead, with a contrarian bent. Also includes regular podcast episodes a day (or more) early and without ads or announcements.