Bolsas Americanas Enfrentarão Semana Cheia de Testes de Nvidia a Powell
Introduction
The upcoming week is set to be a crucial one for stock traders who are recovering from the market’s worst phase since February. Investors will be closely watching the balance sheet of Nvidia Corp. and will also be awaiting a speech by Jerome Powell, the president of the Federal Reserve. These events hold significant importance for the market and may determine its future trajectory.
Nvidia Corp.’s Balance Sheet
Investors will be eagerly awaiting the release of Nvidia Corp.’s balance sheet on Wednesday. The chipmaker’s May earnings report played a crucial role in the advancement of the artificial intelligence sector and resulted in a 14% increase in the S&P 500 index. Therefore, the release of the upcoming balance sheet will set the tone for the market.
Jarome Powell’s Speech
Jarome Powell, the president of the Federal Reserve, will be delivering a speech at a Fed symposium in Wyoming. Traditionally, a Fed chair’s conference address has propelled stocks in the market. On average, the S&P 500 has gained 0.4% in the week following the event. However, the memory of 2022’s market decline of 3.2% after Powell’s comments warning against tight policies to combat inflation is still fresh in traders’ minds. The risk this time is that Powell’s speech might tilt towards the prospect of further tightening this year, which could negatively impact growth expectations and undermine Wall Street’s earnings forecasts, especially for high-tech stocks.
The Importance of Fed’s Path
The decisions made by the Federal Reserve remain crucial for the market, with three more meetings of the Open Market Committee (FOMC) scheduled for 2023. Traders currently expect interest rates to be maintained next month, with less than a 50% chance of a rate increase at the subsequent meeting in November. However, the Fed’s decisions will largely depend on the development of inflation and the resilience of consumer spending.
Concerns About Inflation vs. Resilient Consumer Spending
Recent reports have shown that inflation was under control in July. However, strong retail sales data indicate that US consumers remain resilient. The Fed will closely monitor these factors and may adopt a more hawkish stance if inflationary pressures persist. Balancing concerns about inflation and monetary policy with the need to support economic growth is a complex task for the Fed.
The Market’s Response
The sell-off in US stocks gained momentum last week, and the S&P 500 is currently on track for its worst month of the year. Derivatives traders have also shown increased interest in options contracts that bet on further market declines. The positioning of traders suggests that there is increased attention and caution regarding the market’s future. The upcoming Fed symposium has gained even more significance as a result.
Conclusion
As stock traders recover from a challenging period, the upcoming events of Nvidia Corp.’s balance sheet release and Jarome Powell’s speech will be critical in shaping the market’s direction. The decisions made by the Federal Reserve will determine the trajectory of interest rates and impact growth expectations. Investors are particularly focused on whether Powell’s speech will indicate a potential tightening of policies, which could negatively affect earnings forecasts. Moving forward, it is essential for the Fed to find the right balance between tackling inflation and supporting economic growth. With the market already experiencing a downturn, investors are paying close attention to the upcoming Fed symposium and its potential impact on the market’s future.
Summary
Stock traders are eagerly awaiting the release of Nvidia Corp.’s balance sheet and Jarome Powell’s speech. These events will have a significant impact on market sentiment and direction. Investors are concerned about potential tightening policies and the implications for growth expectations and earnings forecasts. The decisions made by the Federal Reserve in the coming months will shape the trajectory of interest rates and the market’s response. Traders are closely monitoring inflation and consumer spending indicators. The market’s recent decline and increased interest in options contracts indicate caution among investors. The upcoming Fed symposium carries even more significance as the market awaits guidance from Powell’s speech.
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Stock traders, who are recovering from the worst phase of the market since February, are facing some crucial events in the coming days, and a speech accompanied by Jerome Powell, president of the Federal Reserve (or American Central Bank), may not be the best test of all.
Ahead of Powell’s speech Friday at a Fed symposium in Wyoming, investors will be watching Nvidia Corp.’s balance sheet (NVDC34), which will be published on wednesday (23) to set the tone. The May earnings report from the chipmaker, now the fourth-largest component of the S&P 500, helped kick off the artificial intelligence career which boosted the advance of the index around 14%.
Powell will close out the week. A Fed chair’s conference address has typically propelled stocks since the turn of the millennium. The S&P 500 gains an average of 0.4% in the week after the event, data compiled by Bloomberg Intelligence show. But 2022 is still fresh on traders’ minds: shares fell 3.2% in the week after Powell’s comments after he warned against sticking to the tight policy to fight inflation.
The risk this time is that it tilts towards the prospect of further tightening this year, which could hurt growth expectations at a time when concerns about China are mounting. It’s a scenario that would also undermine Wall Street’s earnings forecasts, especially for high-tech stocks.
“Investors trust the narrative that inflation is under control and the Fed can claim victory, but it hasn’t come true yet, and that’s the biggest risk to the stock market,” says Stephanie Lang, chief investment officer. by Homrich Berg. . At the same time, “it will be difficult for this recovery to continue unless Nvidia can translate the power of AI into earnings growth.”
In the long run, however, the path taken by the Fed is essential, with three more meetings of the Open Market Committee (Fomc), which sets the US interest rate, still in 2023. In the market, operators are betting on maintaining Interest rates. next month and quoting at less than 50% the possibility that the rate will increase by 0.25 at the next meeting, in November.
A report on consumer prices this month showed that inflation was under control in July. But strong retail sales data also showed US consumers remain resilient, which could lead the Fed to hawkish if inflationary pressures persist.
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As the sell-off in US stocks gained momentum last week, with the S&P 500 posting its first three-week decline since February, appetite for options contracts that bet on further losses has also increased.
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More than 25 million puts were traded on US exchanges on Thursday, the most since the SVB banking crisis in March, while call demand remained average, according to data compiled by Bloomberg. The measure increased further on Friday (18), when the contracts linked to shares and indices expired.
“The high selling volume was a function of markets selling at a new spot range lower than we’ve seen recently,” Rocky Fishman, founder of derivatives research firm Asym 500, said by email. “The proximity to the monthly expiration helped push it above previous highs.”
The S&P 500 is already down 4.8% in August, on track for the worst month of the year, and the Cboe VIX Index, a measure of expected fluctuations in the benchmark, is near the highest level since May.. While the weakness in stocks isn’t causing a panic, derivatives traders are definitely paying attention.
Buy calls to open a position, seen as an indicator of bullish bets, has fallen to its lowest level this year relative to put options to open a position, data from Options Clearing Corp. analyzed by Citigroup shows. Inc. A similar trend can be seen in a broader measure, which also includes puts and calls as a barometer for bullish and bearish bets.
The positioning puts the Fed symposium in an even brighter spotlight. The meeting setup is “complex,” says Dennis Debusschere, president of 22V Research LLC, with rising Treasury yields putting pressure on stocks over the long term and the fight against inflation is far from over.
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“Don’t expect Powell to hit the hammer like he did in 2022,” he said in a note to clients. “We don’t think Powell will change his tone of confidence in the data, which will not be perceived as hawkish when yields rise and risky assets underperform.
© 2023 Bloomberg L.P.
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