Inside Markets — NVDA Report

NVDA has been consolidating for the last three weeks and is back to levels following its strong August print. Recent caution around AI themes likely has positioning somewhat cleaner going into today’s set of numbers. We have the buy-side bars for all earnings metrics (higher than sell-side estimates), but the market reaction to NVDA’s report could come down to Jensen’s pushback against the AI bubble narrative. ORCL was patient zero in the recent outbreak of AI skepticism back in September and it may be notable that shares finally seemed to find a foothold last Friday.

Tomorrow’s release of September non-farm payrolls is the other major catalyst of the week with consensus looking for +50,000. A stronger print (>100,000) would reduce the likelihood of December/January rate cuts and — all else equal — result in bearish yield curve steepening and a stronger USD. This type of outcome should help Financials and hurt rate sensitive groups like homebuilders and utilities. Other cyclical groups like Consumer Discretionary and transports should also benefit. A weaker number would increase the probability of rate cuts, encourage bullish yield curve steepening and a weaker USD. Wage growth is an important factor with the street looking for +0.3% MoM. A higher number could start a stagflation narrative, which would be negative for the broad market. Notwithstanding a higher wage outcome, a weaker payroll number would likely deliver upside in mega-cap tech, metals/mining, and rate sensitive groups.