S&P500: Nvidia Looms as Lower Oil and Falling Yields Lift Stocks

Nvidia Holds Everything Hostage

Yields backed off. Oil dropped 4%. Stocks took the opening and ran with it into the Wednesday afternoon trade. None of that matters until Nvidia reports after the bell. The Dow Jones Industrial Average is up 486 points or 0.98% as of 16:03 GMT. The S&P 500 is up 0.91%. The Nasdaq is leading with a 1.33% gain on continued semiconductor strength. Chipmakers are bid across the board going into the print. The whole session is sitting on one earnings release after the close and everyone knows it.

S&P 500 Index (SPX) Technical Analysis

The S&P 500 Index is higher as we approach the mid-session on Wednesday. The main trend is up according to the daily swing chart, but the minor trend is down. It turned down on Tuesday when sellers traded through 7338.54. This temporarily shifted momentum to the downside.

A trade through 7333.68 will indicate the selling is getting stronger, while a move through 7517.12 reestablishes both the minor and main trends.

The minor range is 7517.12 to 7333.68. Trader reaction to its retracement zone at 7425.40 to 7447.05 will set the tone on Wednesday. Bullish traders are going to try to overcome 7447.05. Bearish traders are going to sell into this zone in an effort to form a potentially bearish secondary lower top.

There is no resistance over 7517.12, but the downside is protected by a series of minor pivots at 7345.62, 7312.49 and 7281.84. This is helping to produce the slow, labored sell-off. However, taking out 7281.84 with conviction could trigger an acceleration to the downside with 7174.12 to 7153.57 the next major target zone.

Traders will be watching the reaction to 7425.40 to 7447.05 carefully because this zone could be a key turning point in the market. A sustained move over 7447.05 will mean increased bets on a new record high. A sustained move under 7425.40 will indicate that new short sellers are stepping up. Their first goal is to retest the major support zone formed by the 50-day moving average at 6958.40 and the 200-day moving average at 6796.25.

The Market Wants More Than A Beat From Nvidia

Nvidia reports after the close and that is the only event that matters today. Wall Street is looking for roughly $79 billion in first-quarter revenue and earnings of $1.81 a share. That implies revenue growth above 80% from a year ago and the bar has been set there all year. Beating estimates is not the question anymore. Beating by enough to justify a multiple that has been priced for perfection for months is the question. That is a different bar and the market has been quietly raising it on Nvidia every quarter. This is the company that has become a market-moving event rather than a single earnings report. A miss does not just hit semiconductors. It resets the entire AI trade and pulls index-level positioning down with it.

China is where this report gets interesting and almost nobody on the Street is positioned for it. H200 approvals for the major Chinese buyers reportedly went through, but Nvidia has not booked the revenue yet, and guidance for the quarter ahead reportedly does not bake in any China data center compute. I’ve seen this before with guidance that quietly leaves money out of the model. The headline number lands fine, the stock pops, and then the call gets to the part where management has to explain what they did not include and why. That is the trade. Jensen on the timing of China and what he says about policy moves the next session more than the revenue print does.

Treasury Yields Ease, Stocks Take the Opening

The 10-year U.S. Treasury yield pulled back from levels that had been pressuring equities all week. The 30-year U.S. Treasury yield came off the highs it hit Monday and that is the move that gave equities the opening. Multiple compression was the entire risk going into Wednesday and lower yields took that off the table for a session. Traders did not wait. Rate-sensitive names caught a bid immediately and the rotation back into duration was obvious from the opening bell. None of this resolves the inflation question. It just buys the market a session of breathing room and that is what equities have been short on for the past three trading days.

West Texas Intermediate crude oil dropped roughly 4%. Spot Brent crude oil dropped close to 5%. That helps the inflation read but only if it sticks. Energy has been the swing factor on Federal Reserve expectations for weeks now. A 4% drop in WTI matters because it pulls inflation forward expectations down with it. A bounce tomorrow puts everything back where it was Monday. The oil move is not a trend until it confirms with a second day.

Minutes Could Reverse the Bond Move

The Federal Reserve minutes hit at 18:00 GMT and that adds another layer of risk to a market already positioned around Nvidia. Traders are not looking for new information from the minutes themselves. What they want is language on energy-driven inflation. Whether policymakers are starting to treat $90 oil as something that filters through to core, or whether they are still calling it transitory. A hawkish read pulls yields back up fast and the equity move from Wednesday morning unwinds before the close. A dovish read confirms the bond move and gives the market room to run into the Nvidia print.

My read on this is services inflation matters more in the minutes than energy. The Federal Reserve has been consistent that energy is volatile and gets looked through. Services is the sticky number, the one that does not come down when oil pulls back, and that is the line that moves bond yields harder than any headline on crude. Any sign in the minutes that policymakers are getting concerned about services accelerating again pulls yields back up and reverses the equity relief we got all morning.

Retail Splits, Software Cuts, Chips Lead

TJX raised full-year guidance and the stock moved higher on it. The message from management was that consumers are still spending hard at the value end of retail. Target dropped despite a better outlook, which tells you the market still does not trust the consumer story from that name.

Lowe’s fell after holding its annual guidance and pointing to continued housing weakness. Marvell, Intel and Micron caught the same bid the rest of the semiconductor complex got, riding the Philadelphia Semiconductor Index higher into the Nvidia print. Intuit went the other way after the company announced layoffs tied to an artificial intelligence restructuring, which the market read as a defensive move rather than a growth signal. Outside of chips the action was split and that is exactly what a session positioned around one earnings release looks like. Nothing else mattered going into the Nvidia print.

Three Triggers Into the Close

Nvidia’s guidance, particularly anything around China and forward demand for the H200, sets the tone for the entire AI trade going into Thursday.

The Federal Reserve minutes at 18:00 GMT will either confirm yields can keep easing or they will reverse the bond move that gave equities room to breathe Wednesday.

Oil prices have to hold the lower range or inflation pressure rebuilds fast and the Fed conversation shifts hawkish again.

Put it together and the market is leaning long into the Nvidia print with the bond move giving it cover. A strong beat with strong guidance after the bell puts new highs in play. A miss, or a hawkish read on the Fed minutes, and Wednesday’s relief move comes apart in a hurry.

Technically, the zone at 7425.40 to 7447.05 is the level that matters into the close. A close above 7447.05 with Nvidia delivering puts a new record high in play before the weekend. A failure there with weak guidance after the bell sets up a retest of 7281.84 and likely lower. That is the trade going into Wednesday’s close.

More Information in our Economic Calendar.