Equities edged higher on Tuesday ahead of NVDA’s pivotal earnings report. The SPX led large cap. stocks higher adding 25 bps while the Nasdaq Composite gained 22bps and the Dow added 17bps.
With the S&P 500 now up 11.6% in 2024 with a forward earnings multiple >20x, valuation concerns are creeping in. The Mag7 continue to pace leadership having added 24% YTD, with NVDA’s earnings coming after the bell and a likely pivotal point in the trend.
The economic calendar shows Mortgage apps and home sale data releases, while FOMC meeting minutes could also be market moving if they bring something new to the inflation dialogue. The homebuilders have been rallying in the near-term on lower rates, but have been sideways over the intermediate-term. More sluggishness in the housing market would likely be a headwind to an already flagging Discretionary sector.
Eco Data Releases | Wednesday May 22nd, 2024
| Date Time | Event | Survey | Actual | Prior | Revised | |
| 05/22/2024 07:00 | MBA Mortgage Applications | 17-May | — | — | 0.50% | — |
| 05/22/2024 10:00 | Existing Home Sales | Apr | 4.23m | — | 4.19m | — |
| 05/22/2024 10:00 | Existing Home Sales MoM | Apr | 0.80% | — | -4.30% | — |
| 05/22/2024 14:00 | FOMC Meeting Minutes | 1-May | — | — | — | — |
S&P 500 Constituent Earnings Announcements by GICS Sector | Wednesday May 22nd, 2024
NVDA will be pivotal, as a disappointment could send a host of shares sharply lower given the wide halo AI has bequeathed on many industries throughout the market. A flagging consumer is a concern for the economy in general and TGT’s earnings release should be an interesting data point to gauge behaviors. WMT has already come through as a winner with wealthy consumers spending more to capitalize on its value proposition. Existing home sales will likely add to the picture with a small gain expected.
- NVDA (200-day m.a. | Relative to S&P 500 )
- Chart remains unmistakably bullish. A break-out above $975 would project to a price target of $1200. Even a miss is likely to be seen as an accumulation opportunity over the intermediate-term given the extraordinary performance of the stock.
- XLY (200-day m.a. | Relative to S&P 500 )
- XLY is on the ropes. Similar to LOW, which was on the cusp of fresh relative-lows and missed, the XLY is looking vulnerable at support and is a recommended underweight position at ETFSector.com
World Wide Wednesday: Don’t Cry If You Don’t Own, Argentina!
Ex-US equities enjoyed a leadership turn from January through mid-April while the US took a breather. The biggest improvements have occurred in the EM space, where China has finally started showing increased momentum in its latest potential bullish reversal. However the stand-out country within EM is Argentina! I will let you guess which relative curve belongs to it!
MSCI EM Index (panel 1) | MSCI EM Constituent Country Indices Relative to EM | LTM
