See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“Nobody owes nobody nothing.” – Rocky Balboa

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Asian stocks traded mostly lower overnight with the Nikkei down close to 1% while Hong Kong and India saw declines of about half that pace. There were reports that the Chinese government plans to stick to its 5% growth target for 2025 even as the market had been expecting a reduction in the target closer to 4%. Keeping it at 5% would make the need for further stimulus more likely. In Europe, the tone is more positive with most major benchmarks trading higher and the STOXX 600 trading fractionally higher. Comments from an ECB official, Villeroy de Galhau, suggested an expectation for inflation still being on pace to return to the 2% target. This view would boost the odds of a 25-bps cut at the December meeting.

In the US, futures were also modestly higher ahead of jobless claims (initial lower than expected, continuing higher) and the Philly Fed (weaker than expected) at 8:30 and then Existing Home Sales and Leading Indicators for October at 10 AM. Treasury yields are modestly lower. Crude oil is up over 2%, along with gold, which is up about 0.5%. The real story, however, is Bitcoin, which is up over 3% and within 3% of $100,000.

All that hype, and all we have to show for it is a fractional gain in the pre-market.  Anticipation of Nvidia’s (NVDA) earnings report last night started last week, and expectations were for a big move. Options markets were pricing in the possibility of an 8% move today in reaction to earnings which would equate to $300 billion in market cap. There aren’t even 30 companies in the United States with $300 billion market caps! NVDA finally reported last night, and after reporting better-than-expected earnings and revenues as well as raising guidance, the stock traded down as much as 5% but is now trading fractionally higher. The options market was only off by a factor of nearly ten!

Where NVDA finishes the day today is anyone’s guess, but a key level for the stock in the short term is $150, which it has had trouble getting above multiple times in the last two weeks. Since first trading above $140 in June, NVDA really hasn’t done much of anything, even though the rest of the market has rallied.

NVDA is the largest component of the Philadelphia Semiconductor Index (SOX) and the largest company in the world, and its massive rally this year has been more of an exception within the semiconductor space than anything else. As shown in the chart below, the SOX is down over 15% from its record high in June.

Of the 30 stocks in the SOX, their average YTD performance has been a gain of 13.7%. However, that number has been skewed by a few big winners. The median performance of the 30 stocks in the index has been a gain of just 1.46%, and only seven stocks in the index are outperforming the S&P 500 on a YTD basis. For a sector that’s typically been considered a leading indicator for the overall market and the economy, the semis are no longer a green light.

See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“We survived ourselves. We were our own worst enemy.” – Jensen Huang

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

There’s a modestly positive tone in futures this morning, but the decks have been cleared to the mother of all earnings reports after the close when Nvidia (NVDA) reports. The only economic report on the calendar was MBA Mortgage Applications which showed a weekly increase of 1.7%. Asian stocks were mixed overnight with modest moves in either direction, and it’s a similar story in Europe this morning. Expect to see much larger moves in tonight’s Asian session, though, as NVDA’s results will have reverberations across the tech sector.

Walmart (WMT) may have marked the unofficial end of earnings season yesterday, but the largest company in the world goes by its own rules and reports on its own schedule. As mentioned above, NVDA will report after the close today, and with the stock accounting for more than 7% of the entire S&P 500 (most than most sectors), a lot rides on how the company reports. The company has reported an astonishing seven straight earnings triple plays which is practically unheard of for any company, but the fact that the most valuable company in the world has so consistently exceeded expectations across the board is unbelievable.

The chart below shows the performance of Nvidia (NVDA) since the release of ChatGPT nearly two years ago, and the red dots indicate each of the seven earnings reports (all triple plays) during that time.  While the stock has had several positive reactions to those seven earnings reports (it rallied between 9% and 24% the day after four of those reports) not every one of those triple plays was a launching point for the stock. Following three of those reports, the stock was flat to down on the day after in reaction, including a 6.4% following its triple play in August. As “blowing the doors off” relative to expectations has become more common, investors have come to expect it, which only raises the bar. The best thing NVDA may have going for it heading into this afternoon’s report is that the stock has gone nowhere in the last five months.

For investors positioned for a broadening of the rally, a positive reaction by the market to NVDA earnings may be the last thing they want. The chart below shows the performance of NVDA versus the Russell 2000 ETF (IWM) during 2024. Since the end of May, there has been a tendency for the Russell 2000 to perform poorly when NVDA has surged as it sucks all the capital from the pool, and vice versa.

As the market awaits NVDA earnings, this morning’s major report has been Target (TGT) which reported a reverse triple play with weaker-than-expected EPS, revenues, and lower guidance. While analysts have consistently underestimated NVDA earnings, they have been overly optimistic regarding TGT results. As shown in the snapshot below, before this morning’s report, its last report was the only one in the previous ten where the company didn’t miss EPS forecasts, revenue forecasts, or lower guidance.  By missing all three this morning, the stock is indicated to gap down over 18%, which would be the second largest downside gap in reaction to earnings since at least 2001.

As shown in the graphic above, even with the relatively poor results recently, shares of TGT haven’t necessarily reacted negatively to the news. However, even in a bull market where the S&P 500 has surged, the stock has performed negatively, and there are only three reports in the last eight where the stock was higher going into one earnings report than it was heading into the prior report.