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S&P 500 Hits Fresh Highs in Countdown to Nvidia

(Bloomberg) -- Stocks rose to another record ahead of results from Nvidia Corp. — the giant chipmaker at the heart of the artificial-intelligence revolution that has powered the bull market.

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The bar is high for the Santa Clara, California-based company — whose shares have soared over 90% this year after more than tripling in 2023. Investors are waiting to see whether the poster child of AI will be able to match the sky-high expectations surrounding the technology. Nvidia’s revenue is expected to be buoyed by soaring demand in its data-center business.

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“With markets trending upward and emotions in check, Nvidia’s performance will be pivotal in gauging the sustainability of the current market run and the potential for a more inclusive market rally,” said Mark Hackett at Nationwide.

Traders also kept a close eye on a handful of Federal Reserve speakers, with Governor Christopher Waller saying a continued softening in data over the next three to five months would allow the Fed to consider cutting rates at the end of 2024.

The S&P 500 saw its 24th record this year. Nvidia edged up. Palo Alto Networks Inc. slid on a downbeat forecast. Macy’s Inc. rallied after beating profit estimates. The Cboe Volatility Index - the VIX - closed at its lowest since November 2019.

Treasury 10-year yields dropped three basis points to 4.41%.

Stock investors are bracing for a spike in volatility, and upcoming events such as Nvidia’s earnings report can exacerbate any moves, according to Goldman Sachs Group Inc. strategists.

The bank’s measure of risk appetite hit the highest since 2021 last week, driven by optimism around economic growth and monetary policy, but momentum has slowed, the team led by Andrea Ferrario wrote.

The strategists point to CBOE Volatility Index options data that signal higher demand for hedges against sudden market declines, at a time when the gauge has dropped to historically low levels.

Key events this week:

  • US existing home sales, Wednesday

  • Fed minutes, Wednesday

  • Nvidia earnings, Wednesday

  • Eurozone S&P Global services and manufacturing PMIs, consumer confidence, Thursday

  • G-7 finance meeting, May 23-25

  • US new home sales, initial jobless claims, Thursday

  • Fed’s Raphael Bostic speaks, Thursday

  • US durable goods, consumer sentiment, Friday

  • Fed’s Christopher Waller speaks, Friday

--With assistance from Carly Wanna.

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