S&P 500 weekly report: Nvidia'searnings to shape market sentiment

Nvidia's earnings as pivotal factor in shaping market sentiment this week

A quieter start on the economic front saw the US dollar retreat from its one-year high and a pause in the Treasuries sell-off, offering room for a breather in Wall Street Wall Street. Nvidia’s earnings are anticipated to be the single most significant risk event this week. Given its substantial weight in both the S&P 500 and Nasdaq indices, its results may singularly determine a make-or-break moment for global markets.

Expectations heading into its results remain high, with a previous string of significant outperformance making investors cautious of going against the trend, with many leaning towards long positions.

What to expect for Nvidia's earnings

Nvidia's Q3 2024 revenue is expected to grow by 82.9% to US$33.1 billion versus the US$18.1 billion a year ago. While this may signal a slowdown from the triple-digit growth experienced over the past four quarters, an 82.9% growth for the world's most valuable company remains significant, demonstrating the strong demand for artificial intelligence (AI) GPUs, particularly from cloud service providers and enterprises adopting accelerated computing for AI applications. Earnings per share (EPS) is expected to grow 85.6% to US$0.75, up from the US$0.40 a year ago.

Investor focus

The focus will likely be on whether Nvidia's guidance can continue to impress. Last month, CEO Jensen Huang mentioned that demand for its new Blackwell AI chips is "insane." Earlier guidance indicated that demand would outstrip supply well into 2025, so attention will be on whether the growth momentum can be sustained into the foreseeable future to justify its lofty valuation.

Nvidia's financial metrics

S&P 500: back to retest previous resistance-turned-support

Market reaction

The touch of the key psychological 6000 level for the S&P 500 last week triggered a bout of profit-taking, which saw the S&P 500 retreat more than 2% from its record high. Market participants seem to find fault with the upward move in US Treasury yields, fuelled by less dovish rhetoric from Federal Reserve (Fed) Chair. That said, we believe that the broader upward trend for the index is likely to persist, with economic data validating soft-landing expectations, positive year-end seasonality, and the Fed's easing process continuing, albeit at a more gradual pace.

Technical analysis and support levels

Interaction with the previous resistance-turned-support level at 5861 saw the stepping in of buyers attempting to form a new higher low, as its daily relative strength index (RSI) at its mid-line offers a near-term technical reset. Should the 5861 level fail to hold, we may expect a deeper retracement towards the 5674 level next, where its 100-day moving average (MA) in confluence with its daily Ichimoku Cloud zone will be on watch to offer stronger support.

Levels:

• R2: 6168
• R1: 6000

• S1: 5861
• S2: 5674

US 500 daily chart

Sector performance trends amid rising Treasury yields

Sector performance over the past week leaned predominantly to the downside, as the Trump-induced rally on Wall Street experienced some rollover amid pressures from rising Treasury yields. The US 10-year yields briefly surpassed the 4.5% level for the first time since May this year, triggering market volatility at this key psychological threshold, as valuation for rate-sensitive growth stocks was brought into question.

Index and sector movements

The S&P 500 index ended the week lower by 2.1%, with only two sectors—financials and energy—in the green. The financial sector benefitted from a pullback in rate cut bets into 2025, while the energy sector managed to reclaim some of its year-to-date underperformance due to optimism around deregulation under Trump and the expansion of US energy dominance.

Performance of major stocks

The Magnificent Seven stocks were broadly lower, apart from Apple, which saw a 1.7% gain. Tesla and Nvidia were down more than 3%, while Meta declined by more than 5%.

SPX sector returns: one-week and one-month

SPX sector returns: one-month and year-to-date

Sector ETFs summary
*Note: the data is from 12 – 18 November 2024

Top 15 winners and losers
*Note: the data is from 12 – 18 November 2024.

Top stocks by sectors
*Note: the data is from 12 – 18 November 2024.