NAS100 Upbeat on Nvidia’s Blowout Results, Overlooking Hawkish FOMC Minutes
Reserved Fed
The Fed had stood pat on rates in its last meeting and although it had hinted at peak rates, it called for sustained restrictive stance and had pushed back against rate cuts until it has "greater confidence" that inflation is moving "sustainably" towards the 2% target. [1]
Subsequent commentary and the accounts of that meeting released on Wednesday reaffirmed this reserved stance. According to the minutes, "Most participants noted the risks of moving too quickly to ease the stance of policy" [2]
With strong economy, robust labor market and persistent inflation, policymakers have no rush to start lowering rates and markets have pared back their aggressive bets. CME's FedWatch Tool assigns the highest probability for this process to begin in June and lead rates 75-100 basis points lower by the end of the year. [3]
NVIDIA Blowout Results
The leader and enabler of the AI revolution reported record top and bottom lines for Q4 FY2024 overnight. Revenue surged 265% y/y in excess of $22 billion, while Net Income registered a nearly nine-fold jump to $12.285 billion. [4]
The revenue increase reflects "higher shipments" of GPUs used for training and inference of large language models and generative AI application according to CFO Colette Kress. CEO Jensen Huang sees "excellent" conditions for "continued growth" and the firm forecasts sales of $22 billion in the current quarter, which would constitute growth of nearly 235% y/y.
NVDA.us more than tripled in 2023 due to the AI advance, driving Wall Street's rally. It gained around 25% this year, as of yesterday's close and markets reacted positively to the record results and upbeat guidance, sending the stock 6% higher in extended trading.
NAS100 Analysis
The tech-heavy index faced headwinds over the past several days as markets came to grips with the Fed's reserved approach to cutting rates, creating risk for sub-EMA200 moves (14,370-22), but sustained weakness below it will need strong catalyst.
NAS100 has shown resilience and lools past the hawkish FOMC minutes, focusing on Nvidia's blockbuster results. These helped it defend the EMA200, which keeps it on track for new all-time highs (18,053).
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 22 Feb 2024 https://www.federalreserve.gov/monetarypolicy/files/monetary20240131a1.pdf | |
| Retrieved 22 Feb 2024 https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20240131.pdf | |
| Retrieved 22 Feb 2024 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html | |
| Retrieved 05 May 2024 https://investor.nvidia.com/financial-info/financial-reports/default.aspx |
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