Tuesday saw a significant recovery in the stock market, with gains ranging from modest to solid. The afternoon session was particularly strong, as the Nasdaq achieved a record closing high. While April’s Producer Price Index (PPI) came in hotter than expected, March data underwent a sharp downward revision, adding complexity to the inflation narrative. Various components that contribute to the Fed’s preferred inflation gauge, the core PCE price index, have been clarified, with Fed Chairman Jerome Powell highlighting the “mixed” nature of the PPI in his Tuesday remarks.
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Stocks to Watch: Nvidia and More
Nvidia (NVDA) is approaching a critical buy point, with its earnings report just a week away. This is a stock to keep an eye on as it could signal broader trends in the tech sector.
Other stocks making notable moves include Embraer (ERJ), Pure Storage (PSTG), On Holding (ONON), CrowdStrike (CRWD), and Oracle (ORCL), all of which have either broken out or flashed other buy signals. These stocks are showing strength and may offer promising opportunities.
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Inflation and Economic Data
Economists are predicting a 0.3% rise in both overall and core consumer prices for April, following a 0.4% increase in March. Overall CPI inflation is expected to decrease to 3.4% year-over-year from 3.5% in March, while core CPI inflation is projected to drop to 3.6% from 3.8%.
April’s retail sales are forecasted to rise by a solid 0.4%, following a 0.7% increase in March. However, sales excluding autos and gas are expected to see a modest rise of just 0.1%, after a 1% increase in March.
The New York Fed’s Empire State Manufacturing Index is anticipated to improve to -10 from April’s -14.3, though it remains below the breakeven point.
Strategic Moves in the Market
The current stock market recovery is trading tightly, just below record highs. This consolidation period is allowing more stocks to establish solid bases, while those that are already rising rapidly are seeing improved relative strength.
Stocks like Pure Storage and Embraer are breaking out, presenting potential opportunities. Meanwhile, Nvidia is forming a base, making it a stock to watch closely.
Wednesday’s CPI inflation report and other economic data releases will be crucial. However, the market is particularly anticipating Nvidia’s earnings next week, which will be pivotal for the AI sector and the broader market recovery.
What to do now
Given the current market conditions, it’s wise to be cautious with your exposure, especially within the AI and tech sectors over the next few days. This is a critical time to refine your watchlist and focus on stocks that are positioning themselves well for potential gains.
Stay tuned to key economic indicators and earnings reports, as they will provide important insights into market direction and potential investment opportunities.
Happy trading!