Market's Reaction to Nvidia Report Raises Flags

Significant headlines hit the market on Thursday, but the major indices finished the day with minor gains. Strong earnings from Nvidia NVDA helped boost the Magnificent Seven MAGS, semiconductor SMH and technology sectors. Headlines about court rulings on tariffs just added confusion and uncertainty. Breadth finished around two-to-one positive, but there were only 200 new highs to 110 new lows, which is not very impressive.

The market's failure to perform better on the Nvidia NVDA report raises some caution flags, but the indices are still in good shape and testing recent highs. There are support and dip buyers out there, and even with some negative economic narratives, the bears are unable to gain any traction.

The biggest positive that the market has going for it is the continued skepticism about the health of the economy. There is still a significant group of bears who are convinced that it is just a matter of time before some poor economic news hits. They have been wrong so far, and the longer they remain wrong, the more likely they are to start capitulating and put some cash to work.

With Nvidia earnings out of the way, there won’t be any more big reports until the second quarter reporting starts in mid-July. In the meantime, we will have a steady flow of trade and tariff news to jerk things around and also some very important economic data.

Fed Chair Jerome Powell met with President Trump on Thursday and restated that economic policy will be solely determined by incoming economic data. Trump is confident that inflation is coming down and growth is picking up, so an interest rate cut makes sense, but Powell wants some hard evidence before he will give Trump what he wants.

The indices are staying sticky to the upside, and that is good enough for now, but they need more energy If they are going to keep the uptrend going.

Have a good evening. I’ll see you tomorrow.

At the time of publication, DePorre had no positions in any securities mentioned.