The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Down the middle.
Nvidia beat consensus expectations, as expected. The results didn’t knock investors socks off nor did they scare investors about the future. The stock initially fell 4% in after-hours trading, climbed to down a percent or so by the premarket and up and down small during the session. It allowed the rest of the market to take a deep breath and get back to the usual business of going up. The S&P 500 opened up small, dipped, and eventually rallied, printing new all-time highs in the process. Drama concerning the White House and the Fed continues but markets are resilient to the news (so far). The Treasury curve actually flattened today and Fed Funds futures continue to expect a cut in September (85% probability) and 55 bips of total cuts for 2025.
Since Nvidia *wasn’t* a catalyst for equities today, action feels very much like a relief rally. Investors didn’t have to deal with a big change and they could retain their perspective on stocks and the economy. Even Treasuries relaxed, undoing some of the steepening from the initial Trump firing Cook headline.
At this point, we should coast through month-end. It’ll be back-to-school for the kids and back-to-business for Wall Street. The summer was quiet and fine for the bulls and the investment landscape is favorable. The next batch of significant economic data won’t change market expectations unless we get an outlier. This means that we are likely to be on rails psychologically until the FOMC decision on September 17.
If the crowd isn’t likely to change its outlook before then, what do you think the most likely outcome is?
Will the market continue the trend?
Will the market rethink and reverse the trend?
Market fluctuations are random but crowds don’t upend major trends randomly. Crowds need reasons. There are likely to be none for a while.
See you tomorrow.
-Mike
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