Nvidia earnings can drive US stock market rally, say JP Morgan traders

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on Feb 23, 2024
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  • Nvidia's results underscores the market's reliance on earnings reports.
  • Nasdaq 100 Stock Index climbed over 3%, fuelled by renewed excitement.
  • S&P 500 Index recording its best day since November.

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A blockbuster earnings report from NVIDIA Corp (NASDAQ:NVDA) has the potential to reignite Wall Street’s interest in US stocks, according to JPMorgan Chase & Co.’s trading desk.

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The anticipation surrounding the results led by Andrew Tyler, Head of US Market Intelligence, suggested a bullish shift towards US stocks, potentially overshadowing concerns about Federal Reserve interest rate cuts.

S&P 500 and Nasdaq 100 surge

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The actualization of these expectations was evident as the market responded with a surge, with the S&P 500 Index recording its best day since November, rising over 2%.

Similarly, the Nasdaq 100 Stock Index climbed over 3%, fuelled by renewed excitement over the potential impacts of artificial intelligence technology.

Analyst suggests boost for US equities

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Andrew Tyler highlighted the potential catalyst effect of Nvidia’s performance on market sentiment.

He suggested that not only could it bolster bullishness towards US equities, but it could also lead to a further detachment of stocks from yields, as evidenced by the performance of key players despite fluctuations in interest rates.

Investor anticipation

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The anticipation surrounding Nvidia’s results underscores the market’s reliance on earnings reports to sustain positive sentiment, especially following recent concerns dampening the market’s momentum due to unexpected consumer and producer price increases potentially affecting interest rate expectations.

Keith Buchanan, a senior portfolio manager at GLOBALT Investments, emphasized the significance of earnings meeting market expectations amidst a volatile market environment.

Tyler, along with JPMorgan’s trading desk, reiterated a “tactically bullish” stance on stocks, citing favourable economic conditions, robust earnings, and a supportive Fed policy.

JPMorgan confident of fundamentals

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Despite acknowledging potential short-term fluctuations, particularly due to month-end seasonality, JPMorgan’s trading desk maintains confidence in the overall macroeconomic and fundamental backdrop.

They advocate for long positions in technology and select cyclical sectors such as large-cap banks, credit card issuers, homebuilders, transportation companies, and retailers.

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