As we head into the new week, Dow Jones futures have shown a slight uptick since Sunday night, alongside S&P 500 and Nasdaq futures. All eyes are on Nvidia, with the anticipation building for its upcoming earnings report.
Last week, the stock market enjoyed weekly gains, with the Dow Jones Industrial Average hitting a significant milestone on Friday. This week, the focus shifts to the latest meeting minutes from the Federal Reserve and the eagerly awaited earnings from the AI giant, Nvidia (NVDA).
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What to Watch This Week
The Fed’s May meeting minutes are set to be released on Wednesday. Investors will be pouring over these minutes, looking for any hints about the future direction of interest rates. With Fed Chairman Jerome Powell working from home after a positive Covid-19 test, the market is keen to understand the central bank’s stance.
In addition to the Fed minutes, several key economic reports are on the docket. Existing home sales data will be out on Wednesday, new home sales on Thursday, and the S&P U.S. Purchasing Managers’ Index (PMI) for both manufacturing and services will be released on Thursday as well.
Spotlight on Nvidia Earnings
All eyes are on Nvidia as the chip giant prepares to report its earnings on Wednesday evening. Analysts are expecting impressive numbers, with earnings projected to skyrocket 413% to $5.59 per share and revenue expected to jump 242% to $24.57 billion.
But the big question remains: even if Nvidia exceeds expectations and provides robust guidance, will that be enough to meet investor expectations?
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Nvidia’s stock rose 2.9% last week, closing at 924.79. The shares broke out past a cup-with-handle buy point at 922.20 on Wednesday and retested that entry on Friday. Nvidia isn’t alone in this surge; other AI-related stocks like Broadcom (AVGO), Microsoft (MSFT), Super Micro Computer (SMCI), and Advanced Micro Devices (AMD) are all hovering near their own buy points.
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Other Key Reports
Several other companies are set to report earnings next week, including PDD Holdings (PDD), Palo Alto Networks (PANW), Modine Manufacturing (MOD), Toll Brothers (TOL), Synopsys (SNPS), Deckers Outdoor (DECK), and Williams-Sonoma (WSM).
What Should Investors Do Now?
The stock market has seen four consecutive weeks of gains without a follow-through day. Despite this, market breadth remains robust, with many stocks flashing new buy signals and several leading names like ERJ, GS, and CB showing strong performance.
However, caution is advised, especially with AI stocks ahead of Nvidia’s earnings report. Nvidia’s results could have a significant impact on the broader market, so it’s wise to be careful about increasing overall exposure at this juncture.
This is a great time to review your portfolio. Are there any underperformers that could be sold to make room for new opportunities? Do you have too much exposure to AI stocks for your comfort?
Keep refining your watchlist. Numerous stocks are showing signs of recovery across various sectors, presenting potential new opportunities for savvy investors.