The market correction appears to be over. ’s earnings tonight are pivotal.
The dip buyers finally stepped in late yesterday morning. The S&P bottomed at 6,574, which was the classic 5% below the October all-time high. After pulling back 50 points from the afternoon high into the close, still down 55 points, there was certainly doubt about how committed the dip buyers were. But within the first half hour today, the S&P was up 57 points, and the sentiment was clearly positive. The indexes are all still down for the trailing week and month, but the storm has hopefully run its course.
NVIDIA’s earnings tonight are the key to further gains from here. The shares are up 1.5% so far. NVIDIA is key because all the massive data center plans are wrapped around NVIDIA chips, and the company has financial agreements with many of the AI players. A bullish report and forecast will invigorate Mega Tech, which very much steers the indexes, and index moves are what create the majority of buying and selling. The Magnificent 7 was up 2% this morning, but still down for the week, and flat for the trailing month, down 6.2% from the all-time high.
Interest rates remain flat. Bets for a December cut by the Fed are modestly higher at 45%. Any cut will be bullish for stocks and would be very helpful for a year-end rally, though a 50bps cut may create recession fears in the short run.
On the earnings front, had a meet on the top and a small beat on the bottom but lowered the full-year profit forecast due to economic uncertainty. The shares nevertheless are up 4.7% (-7% YTD) as it wasn’t as bad as . had a meet on the top and small beat on the bottom and cut its profit outlook on slower traffic and a cautious consumer. The shares are down 1% (-35% YTD). Target has lost its way, down 49% over the last 5 years. TJX (TJX) had beats top and bottom and is benefiting from consumers trading down to their more affordable offering. The shares opened up +3.7% but have since gone flat (+21% YTD). The company has been one of the best retailers for a long time, +141% in the last 5 years.
On the commodity front, gold is up 1%, back above $4,100/oz, silver +2.3%, copper creeping back to $5.00/oz. Crude oil is down 2.4% dropping below $59/bbl before bouncing. Natural gas is up 3.6% to $4.53/mcf, now up 44% in a month. Crypto continues to suffer, with Bitcoin down to $90.3K, down 16.4% in a month, now down 28% from its high.
The retail earnings have brought back concerns about the consumer. The elevated VIX had dropped below 22 into the open as stocks surged, but then rebounded right back to 23.7 as the dip buyers pulled back. The only sectors left in the green are Tech and Communication services, led by , which is up 5.1%, now up 16.5% in a month on the back of an AI deal with Apple and the news about Berkshire Hathaway taking a position in the name. Where we go from here depends on NVIDIA.