It’s halfway through Friday’s trading session for US stocks, and the major indices have given up earlier gains. Earlier this morning both the NASDAQ 100 and the S&P 500 hit fresh record intra-day highs, helped along by NVIDIA. Having jumped close to 7% yesterday, it added another 3% in after-hours trade this morning. Investors continue to close their eyes and pay up in a seemingly desperate attempt to get a slice of generative AI action, while quashing their collective FOMO. The size and speed of this latest leg of NVIDIA’s rally is quite stunning. The chip designer’s stock is up 93% since the start of this year. In contrast, Tesla, the old market darling, is down 28% over the same period. In fact, it’s been a mixed few months for other ‘Magnificent Seven’ stocks. Meta Platforms has tacked on an impressive 45%, while Amazon and Microsoft are up 16.7% and 8.6% respectively. But Apple has lost close to 12% so far this year, while Alphabet (another generative AI player) is down 4%. What to make of it all? Well, it’s quite obvious that some differentiation is coming back into the market, but one could argue that that there’s now too much concentration of risk in NVIDIA. The chart is looking very etiolated, and we’ve got a long wait until there’s another quarterly earnings update which could provide further evidence to back up or boost its current valuation.
US stock indices rallied initially following today’s Non-Farm Payroll release. While payrolls came in above the consensus expectation, there were significant downward revisions to the last two months of data. Average Hourly Earnings dropped back following last month’s high reading, and the Unemployment Rate jumped to +3.9% against last month’s +3.7%. Overall, this was what the market wanted – signs that the labour market was loosening up. But equities have pulled back from their best levels, led by NVIDIA which is now down on the day. Is this just a small burst of profit taking ahead of the weekend, or the start of something bigger?
US stock indices rallied initially following today’s Non-Farm Payroll release. While payrolls came in above the consensus expectation, there were significant downward revisions to the last two months of data. Average Hourly Earnings dropped back following last month’s high reading, and the Unemployment Rate jumped to +3.9% against last month’s +3.7%. Overall, this was what the market wanted – signs that the labour market was loosening up. But equities have pulled back from their best levels, led by NVIDIA which is now down on the day. Is this just a small burst of profit taking ahead of the weekend, or the start of something bigger?