Investors are in for a holiday-shortened week with a pivotal update from the AI sweetheart of the 2023 stock market rally taking center stage. Chip powerhouse Nvidia (NVDA) is set to release its quarterly report on Tuesday alongside other big players such as Lowe’s (LOW), John Deere (DE), Best Buy (BBY), and Zoom (ZM).
The unfolding drama surrounding Sam Altman’s removal and potential reinstatement at OpenAI, the maker of ChatGPT, is also drawing attention. This is due to the significant role the company and AI have played in driving this year’s market rally and Microsoft’s substantial investment in the AI startup.
The economic calendar is expected to be relatively quiet, with the University of Michigan’s consumer sentiment survey and manufacturing data headlining the schedule. Additionally, the stock market will be closed for the Thanksgiving holiday on Thursday.
The end of last week saw the stock market make substantial gains across the board, triggered by a lower-than-expected inflation reading for October.
While all three major indexes have experienced an uptick since the beginning of November, the Nasdaq (^IXIC) is up approximately 10%, the S&P 500 (^GSPC) is up nearly 8%, and the Dow Jones Industrial Average (^DJI) has risen nearly 6%.
Interestingly, the economic narrative shifted last week with a surprise inflation print for October indicating a slower increase in consumer prices. Investors took this as a signal that the Federal Reserve is likely done raising interest rates and may successfully engineer a “soft landing” scenario where inflation retreats to the central bank’s 2% target without a recession.
However, economists caution against celebrating this outcome just yet. Oxford Economics’ lead US economist Michael Pearce believes that while interest rates are unlikely to rise further, the previously-mentioned data may not be sufficient to convince the Fed that inflation is on a sustained path back to 2%.
The much-anticipated earnings release from Nvidia is expected to have significant reverberations across the market. The company has been a market leader again after a period of cooling off, with its stock rising more than 20% since November’s start, and a staggering almost 240% year-to-date increase.
Expectations are high for Nvidia’s earnings report, with Wall Street anticipating adjusted earnings per share of $3.39 on revenue of $16.11 billion. Bank of America research analyst Vivek Arya expressed optimism, projecting that Nvidia will surpass consensus estimates, highlighting the stock’s compelling valuation and favorable seasonal trends.
In a recent report, Goldman Sachs revealed that the “Magnificent 7” tech stocks make up nearly 30% of the S&P 500 and have driven most of the index’s gains this year. As a group, the “Magnificent 7” is up around 70% this year, significantly outperforming the remaining 493 S&P 500 members.
Looking ahead, investors will also be closely monitoring earnings reports from other major corporations such as Best Buy, Lowe’s, and Dick’s Sporting Goods.
Monday will see Trip.com (TCOM) and Zoom (ZM) reporting earnings, along with the release of October’s Leading Index data. Tuesday’s highlights include earnings reports from Abercrombie & Fitch (ANF), American Eagle (AEO), Best Buy (BBY), Lowe’s (LOW), Nvidia (NVDA), and more, as well as updates on existing home sales and the release of FOMC Meeting minutes.
On Wednesday, Deere & Co. (DE) will release earnings, while the University of Michigan’s consumer sentiment, initial jobless claims, and durable goods orders data are due. Markets will be closed on Thursday for the Thanksgiving holiday, and Friday will feature the release of S&P Global US Manufacturing PMI and Services PMI readings for November.
Josh Schafer is a reporter for Yahoo Finance.
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