Over the past week, investors have been contemplating whether the NASDAQ will be able to maintain its upward momentum. This is also something we have focused on as part of our daily market analysis as earnings season ends and the NASDAQ trades at a psychological level. Over the past two days, the price had declined by up to 2.50%. However, we have repeatedly mentioned a word of caution; NVIDIA’s earnings report.
Indeed, the NASDAQ was saved by NVIDIA’s earnings report, as the price spiked up 2.25% when the release approached. The index also continues to rise during this morning’s futures market. The company’s earnings per share read $1.09, which is 18% higher than markets were expecting. The Company’s revenue also read 10% higher than expected. As a result, the stock's price jumped 24.63% after the market closed, one of the most substantial price increases during this quarter's earnings season. So far this year, the stock has increased by 113%. NVIDIA is the fourth most influential stock within the NASDAQ and holds a weight of 5.5%.
Furthermore, the US Dollar continues to increase in value against most currencies. The US Dollar Index rose to 104.10, 0.21% higher than the market open, and has broken above the resistance level stated in yesterday’s market analysis. So far, the index continues to follow a bullish trend pattern. The Euro also saw bullish price movement against most competitors, bar the US Dollar. While the Pound only saw a quick and sharp increase after the high inflation data.
NASDAQ - NVIDIA Stocks Jump 24% After Market Close
The price of the NASDAQ ended the day lower than the market open, but the index saw a change in its price action after US investors entered the market. The price this morning also has shown signs of higher price movement at the opening of the futures market. However, investors are concerned that the SNP500 and the Dow Jones prices continue to decline. The SNP500 declined by 0.73% and the Dow Jones by 0.79%.
This morning's May price driver is the latest earnings from NVIDIA, as mentioned above. However, investors are also monitoring the Federal Open Market Committee’s Minutes Report from yesterday evening. The Minutes of the Meeting state that the committee is “unsure” whether higher interest rates are required to put further pressure on inflation. The report also confirmed that the committee would increase interest rates further if data warrant the decision.
Therefore, the PCE Price Index on Friday, known to be a favorite of the Fed, is likely to influence the monetary policy. Economists expect the PCE Price Index to read 0.3%; however, if the index reads higher, investors may consider this as an indication of higher interest rate hikes. As a result, if the chances of another interest rate hike increase, the stock market may be further pressured. In addition, investors will also be anticipating the release of the Prelim Gross Domestic Product, which can increase orders and volatility.
USD/JPY
The USD/JPY is forming a clear upward trend when analysing the 4-Hour Chart but is forming a minor retracement this morning. Traders should note that the exchange rate has created a more apparent bullish trend than other major currency pairs. The US Dollar throughout the day by the GDP data and the latest unemployment claims data. However, the main price driver will be tomorrow’s PCE Price Index.
The negotiations between the Democrats and Republicans have also supported the US Dollar. According to the speaker of the Hours, Mr. Kevin McCarthy, there are fewer contentious issues, although the differences still need to be eliminated. Most economists do believe an agreement will be reached before the deadline.
On the other hand, the Japanese Yen continues to be pressured by an ultra-dovish central bank. The current price surge, which far exceeded the targets of the central bank, officials consider temporary. For this reason, the Bank of Japan is in no hurry to reduce economic incentives and move away from the ultra-supportive monetary policy. Tomorrow at 02:30 GMT+3, Japan will also release its inflation data for Tokyo. Economists expect the data to show a decline of 0.1% reading 3.4% yearly. If inflation declines as expected or shows a more significant drop, the Yen may be further pressured.
Nonetheless, traders ought to be cautious of volatility in the short term, regardless of the longer-term trend. This morning, the technical analysis points towards a retracement as the asset forms a downward crossover above the 90-day moving average.
Summary:
- The NASDAQ ended the day lower for a second consecutive day, but buyers increased as the NVIDIA Earnings approached.
- NVIDIA’s earnings per share read $1.09, which is 18% higher than markets were expecting. Revenue was also significantly higher. The stock rose 24.63% after the market closed.
- The US Dollar Index rose to 104.10, which is 0.21% higher than the market open. The index also has broken above the resistance level stated in yesterday’s market analysis.
- The US Dollar throughout the day by the GDP data and the latest unemployment claims data. However, the main price driver will be tomorrow’s PCE Price Index.
