S&P Jumps to Record Highs – Up 0.25%
It was the S&P 500’s turn to hit a new record high yesterday alongside the Nasdaq, as investor optimism ahead of Nvidia’s key earnings report helped to push the indices again to historic levels. The Dow closed up 0.17%, with the S&P and Nasdaq adding 0.25% and 0.22% respectively on the day. US Treasury yields had a more muted day, the 2-year dropping just 0.5 of a basis point to 4.833% and the 10-year losing 2 basis points to 4.416%. The dollar closed flat on the day after trading in relatively tight ranges against most of the majors, the only highlight being volatility in the Cad after a slightly lower CPI data print. Gold had a quiet day after the previous day’s record high and settled down 0.2% at $2,420 per ounce whilst Oil was the standout mover on the day, Brent sinking 1.41% to $82.53 a barrel and WTI losing 0.68% to $79.26 per barrel as traders took ‘higher for longer’ comments from Fed officials more seriously than the rest of the market.
Nvidia Goes Head-to-Head with the Fed
It is looking to be an interesting set up to the New York trading session today as a key earnings report from AI champion Nvidia goes head-to-head with the Federal Open Markets Committee’s Meeting Minutes. For most stock investors it is a no-brainer as to which event is likely to have the biggest impact on the market today with options on Nvida’s value currently pricing an 8.7% move after the announcement. Longer term, the Fed is always going to be the winner but with the current market dynamic, the Fed minutes are likely to be a distraction ahead of the earnings report due to come after the closing bell. Indices once again punched higher to record levels yesterday as investors ignored more Fed comments that rates are likely to remain elevated for longer, but as that option pricing confirms, the possibility of volatility increasing today is huge and a combination of a more hawkish Fed and a lower-than-expected Nvidia report could see markets at very different levels to where they are now.
Volatility Set to Increase for Markets Today
It has been relatively stable in markets for the first couple of days of the trading week, however, that is set to change today with some high-risk events due to take place in each trading session. We have the first major central bank rate call of the week ahead in the Asian session today with the RBNZ set to update the market on their Official Bank Rate, the expectation is for them to keep the rate at a lofty 5.50% but traders are expecting volatility around the statements and press conference. The London session will see the focus on the UK economy with the latest CPI data due out, householders will be hoping that the year-on-year number does come down to relieve some of the pressure on the cost of living, whilst traders are expecting to see moves in the pound given recent moves in the market. The US session, however, is set to see the most volatility, although it will probably all happen towards the end of the day with the FOMC Meeting minutes due out before we hear from Nvidia after the bell.
