S&P 500 Wavers Near Record in Run-Up to Nvidia: Markets Wrap

May 21, 2024

2 minutes read

(Bloomberg) — The stock market fluctuated near all-time highs as traders awaited Nvidia Corp.’s earnings and waded through remarks from a handful of Federal Reserve speakers.

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Equities struggled to gain traction after a rally that put the S&P 500 on pace for its best month in 2024 and near “overbought” levels. Traders decided to take a more cautious stance just a day ahead of the giant chipmaker’s quarterly numbers. Investors around the world are waiting to see whether Nvidia will be able to match the sky-high expectations surrounding the technology that has powered the bull market.

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Federal Reserve Governor Christopher Waller said he needs to see several more good inflation numbers to begin rate cuts, adding that holding rates steady for “three or four” months won’t tank the economy. Separately, Fed Bank of Atlanta President Raphael Bostic noted officials are holding active discussions on the level for rates that neither slows nor stimulates the economy.

“At this point, the higher-for-longer mantra has been absorbed by markets and it would take renewed talk of rate hikes to meaningfully move markets, especially as traders settle in and await tomorrow’s post-bell earnings release from Nvidia — which is widely viewed as the most important catalyst of this week,” said Tom Essaye at The Sevens Report.

The S&P 500 hovered near 5,310. Nvidia fluctuated in the run-up to its results. Palo Alto Networks Inc. tumbled on a downbeat forecast. Macy’s Inc. rallied after handily beating profit estimates. Lowe’s Cos. reported solid comparable sales.

Treasury 10-year yields dropped four basis points to 4.4%. Crypto climbed on signs of momentum toward US approval of exchange-traded funds investing directly in the second-largest token Ether, a shift from a more downbeat outlook as recently as last week.

Stock investors are bracing for a spike in volatility, and upcoming events such as Nvidia’s earnings report can exacerbate any moves, according to Goldman Sachs Group Inc. strategists.

The bank’s measure of risk appetite hit the highest since 2021 last week, driven by optimism around economic growth and monetary policy, but momentum has slowed, the team led by Andrea Ferrario wrote. The strategists point to CBOE Volatility Index options data that signal higher demand for hedges against sudden market declines, at a time when the gauge has dropped to historically low levels.

Key events this week:

US existing home sales, Wednesday
Fed minutes, Wednesday
Nvidia earnings, Wednesday
Eurozone S&P Global services and manufacturing PMIs, consumer confidence, Thursday
G-7 finance meeting, May 23-25
US new home sales, initial jobless claims, Thursday
Fed’s Raphael Bostic speaks, Thursday
US durable goods, consumer sentiment, Friday
Fed’s Christopher Waller speaks, Friday