US stocks opened mixed on Tuesday, as investors awaited Nvidia (NVDA) results and looked to retail earnings and Fedspeak for clues on the economy.
The S&P 500 (^GSPC) is down about 0.1% while the Dow Jones Industrial Average (^DJI) is hovering near the flat line. Meanwhile, the Nasdaq Composite (^IXIC) fell nearly 0.4% after ending Monday at a record high.
Investors are looking to companies for a signal in the absence of high-level economic data releases.
The focus is firmly on Nvidia’s highly anticipated earnings report on Wednesday, which is expected to spur a big move in its stock price and spur shares more broadly. A rise in the price of the artificial intelligence chip maker helped lift the Nasdaq Composite Index to a record high on Monday.
Meanwhile, investors are getting a flurry of quarterly reports from retailers to scrutinize the guidance of consumer spending and the health of the economy.
Lowe’s (Low) sales fell less than expected as cash-strapped Americans continued to spend on small repairs, while Macy’s (M) shares rose after the department store chain’s profits broke a low. AutoZone (AZO) and Urban Outfitters (URBN) are also on the agenda.
Investors are also listening closely to speeches from Federal Reserve officials, as a dearth of economic releases is starving discussion of interest rate cuts. Tuesday’s lineup includes Cleveland Fed President Christopher Waller, among others.
Read more: How does the labor market affect inflation?
In recent days, policymakers have emphasized the message that inflation may not be reliably calm enough to lower interest rates from their current historic highs. More insight — and a key test of optimism about cuts — will come in the release of the Fed’s meeting minutes on Wednesday in May.
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Good rating point on Nvidia from EvercoreISI
An interesting phenomenon has appeared on Nvidia (NVDA).
Stock for the AI chip king may actually be cheap, EvercoreISI notes in a note this morning.
“The combination of slowing revenue growth and increasing concerns about competition has pushed Nvidia’s relative P/E ratio to the lower end of the 10-year range, creating a scenario where earnings and upside are healthy. [on earnings Wednesday] “This will send the stock higher in the near term…and we expect a win and a healthy rally,” says analyst Mark Lepassis.
His chart is below to put a finer point on it.
I will point out that Nvidia stock isn’t actually very cheap from a pure valuation perspective. It trades at roughly 40 times its P/E ratio of estimated forward earnings…and the S&P 500 index trades at about 20.7 times.
All of Nvidia’s key valuation metrics from Yahoo Finance can be found here.
Nvidia stock takes a breather to expand valuation. (EvercoreEasy) -
Nvidia dominance in one chart
Nvidia (NVDA) is having a rough week, and hasn’t even reported earnings (Wednesday evening).
CEO Jensen Huang appeared to be impressed at the Dell (DELL) conference in Las Vegas yesterday, where Dell itself hinted at a possible move into CPUs by Nvidia.
While you continue your homework on Nvidia before tomorrow’s report, a new chart from Goldman Sachs offers a perspective on the AI chip dear.
Nvidia dominance in one chart. (Goldman Sachs)
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