U.S. stocks held firm near all-time highs on Tuesday, as investors anxiously awaiting Nvidia’s (NVDA) results focused on retail earnings and FedSpeak for clues about the economy.
S&P 500 futures (ES=F) were little changed after the benchmark ended just shy of its all-time high set last week. Futures for the Dow Jones Industrial Average (YM=F) and the tech-heavy Nasdaq 100 (NQ=F) also remained flat.
In the absence of top-level economic data, investors are looking to companies for clues.
The focus is firmly on NVIDIA’s highly-anticipated earnings report on Wednesday, which is expected to cause big swings in the company’s stock price and energize the stock more broadly. Rising prices for AI chip makers pushed the Nasdaq Composite Index (^IXIC) to an all-time high on Monday.
Meanwhile, investors receive a flood of quarterly reports from retailers, scrutinizing the direction of consumer spending and the health of the economy.
Lowe’s (LOW) sales fell less than expected as cash-strapped Americans continued to spend on small repairs, but Macy’s (M) stock declined as the department store chain’s profits exceeded low standards. has risen. AutoZone (AZO) and Urban Outfitters (URBN) are also participating in the plan.
Investors are also listening to Federal Reserve officials speak as a lack of economic data gives fuel to interest rate cut discussions. Tuesday’s lineup includes Cleveland Fed President Christopher Waller, among others.
read more: How does the labor market affect inflation?
Policymakers have reinforced their message in recent days that inflation may not have cooled enough to lower interest rates from their current historically high levels. The May Fed meeting minutes, released on Wednesday, are expected to include further insight and an important test of optimism about rate cuts.
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EvercoreISI’s Great Points for Nvidia
An interesting phenomenon has emerged with Nvidia (NVDA).
The AI ​​chip king’s stock may actually be cheap, EvercoreISI suggests in a note this morning.
“Slower revenue growth and increased competition concerns have pushed Nvidia’s relative P/E down to the low end of its 10-year range, creating a healthy beat-and-raise scenario. [on earnings Wednesday] This will lead to higher stock prices in the near term… and we expect a healthy beat-and-raise,” analyst Mark Lipacis said.
To illustrate the finer points, take a look at his graph below.
Note that from a pure valuation perspective, NVIDIA stock isn’t actually super cheap. It trades at nearly 40 times forward earnings, while the S&P 500 trades at about 20.7 times forward earnings.
All of Nvidia’s key valuation metrics from Yahoo Finance can be found here.
Nvidia’s stock price has taken a breather as its valuation expands. (Evercore ISI) -
Nvidia’s advantage in one graph
Nvidia (NVDA) is one week in and hasn’t even reported earnings yet (this was Wednesday evening).
At yesterday’s Dell Las Vegas conference, CEO Jensen Huang seemed to surprise everyone, and Dell itself hinted at the possibility of Nvidia’s entry into CPUs.
Continuing our homework on Nvidia ahead of tomorrow’s report, a new chart from Goldman Sachs provides perspective on the AI ​​chip darling.
Nvidia’s advantage is shown in one graph. (Goldman Sachs)
