Nasdaq Soars As Nvidia Earnings Spark Tech Rally


Simpler Trading Team

4 min read

The markets offered a mixed bag at the Thursday open, with the Dow Jones exhibiting a sluggish start, while the Nasdaq, charged by technology stocks, jolted upwards. This buoyancy within the tech-heavy Nasdaq was largely driven by an impressive rally in Nvidia (NVDA) shares. The overnight market and futures hinted at this divergence, setting a charged stage for the day’s trading activities.

What Happened in the Market: Sectors at Play and Stocks that Stood Out

In a morning of mixed fortunes, distinct sectors like consumer discretionary, communication services, and technology proved themselves as market pace-setters, consistently outshining the broader market indices. Noteworthy is the technology sector, riding high on Nvidia’s superb performance. This sector seemed impervious to the general market ambivalence, showcasing an impressive rally, especially in Nvidia shares.

On the flip side, cyclical sectors bore the brunt of the day’s trading activities. Energy sectors, in particular, recorded a noticeable decline, mirroring a similar downturn in WTI crude oil prices. This is attributable to concerns over the market’s overdependence on fossil fuel energy and the escalating global push towards renewable energy sources.

As we zoom in on individual stocks, Nvidia (NVDA) stands out as the star of the day. The tech giant turned heads and wowed the markets with a robust second-quarter revenue forecast. This robust projection can be credited to the booming demand in artificial intelligence (AI), an area Nvidia has significantly invested in. Unfortunately, some non-tech sectors couldn’t keep up with this high-paced action. This is likely due to the deadlock in U.S. debt ceiling negotiations which affected these sectors.

Earnings: Nvidia Takes the Spotlight

In the corporate earnings arena, Nvidia stole the show and came out on top. The company reported impressive beats on the top and bottom lines for the recent quarter and projected stronger-than-expected revenue guidance for the future. The explosion in demand for Nvidia’s chips used in artificial intelligence (AI) and high-performance computing applications underpinned this significant beat.

These chips have increasingly become vital in the tech world, finding use cases in AI, data centers, and autonomous vehicles. This burgeoning demand resulted in a massive 24.4% surge in Nvidia shares in the day’s trading activities, pushing the company to the brink of a coveted $1 trillion market capitalization. This significant surge is a testament to Nvidia’s remarkable performance and its increasing significance in the technology sector.

Simpler Trading’s Jonathan McKeever, aka, Tr3ndy Jon identified this golden trade opportunity before it happened saying: “It’s important to understand some may look at this like a lotto but I use the levels of S&D and an allocation I’m comfortable trading regardless of events such as Earnings, FOMC, etc”

He sent out a trade alert for a buy order in NVDA:

Tr3ndy Jon closed this trade out for an astounding 514% profit.

If you’re interested in learning more about the supply and demand zones that Tr3ndy John used to identify this trade, you can register for his upcoming webinar here.

Economic Reporting: Debt Ceiling Talks and Economic Projections

While the stock market buzzed with earnings reports and sector performances, another significant event was slowly shaping the economic narrative. The ongoing U.S. debt-ceiling negotiations, though not directly related to the stock market, held significant sway over the economic conversation. These negotiations have been at a slow pace, with a looming June 1 deadline further adding to the anxiety.

These concerns were amplified when Fitch, a leading rating agency, placed the U.S. AAA credit rating on watch for a potential downgrade. The agency cited the stalemate in the debt ceiling negotiations and the threat of a default as significant concerns. The mention of a potential downgrade is alarming and could potentially spur a global economic ripple effect. However, a last-minute resolution remains likely and would be critical in calming the jittery markets.

Market Close

Following an eventful day, the Nasdaq Composite took the spotlight, jumping by 1.71% to settle at 12,698.09, fueled by the upbeat quarterly results from Nvidia. The S&P 500 followed suit, climbing by 0.88% to conclude at 4,151.28. However, the Dow Jones Industrial Average dipped slightly by 35.27 points, or 0.11%, to wrap up the day at 32,764.65.