What’s coming next, a plunge downward or a relief rally? Investors may soon get their answer in a crunch week for the stock market.
While earnings from chip maker Nvidia will be in the spotlight, economic data, retailer reports, and Federal Reserve speakers could be as important.
Nvidia’s report on Wednesday will be vital for restoring confidence in the artificial-intelligence trade. However, the chip company’s customers have already given the game away—they’ve committed to spending big on AI infrastructure in their own earnings. Nvidia has also shrugged off previous disappointments to roar higher so the immediate reaction might not be conclusive.
The bigger question looming over the tech sector and the market in general is whether the Fed will keep cutting interest rates. Traders have been starved of economic data amid the government shutdown but the flow will
resume with the September jobs report on Thursday. While it will be outdated, it can be placed alongside earnings reports from the likes of Walmart and Target this week to get a better sense
of the balance between the labor market, inflation and the health of the U.S. consumer.
With a potential rate cut in December priced as a coin toss, another determining factor is what Fed policymakers are
saying. The minutes from the October meeting—when Fed Chair Jerome Powell warned against assuming further easing was certain—will be pored over Wednesday for clues about the future split between those backing continued cutting or a pause. Multiple Fed governors and regional presidents are also speaking this week and could be more outspoken than normal as consensus breaks down at the central bank.
That’s a lot to take in and some volatility is likely as the various elements are weighed. While upbeat Nvidia earnings could fuel a rush to “buy the dip” and a disappointment could spark AI panic, don’t count on the initial move being the end of the story.
—Adam Clark
***Join Barron’s senior managing editors Lauren Rublin and Ben Levisohn today at noon when they talk with Jan van Eck, CEO of VanEck, about the investment outlook and the economic, technological, and social trends that are animating markets today. Plus, a look at Walmart and Target, and other stocks in the news. Sign up here.
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Nvidia Helped Start the AI Stock Rally. Earnings Are Coming.
Nvidia reports earnings this week just as skepticism of the artificial intelligence trade is higher than at any point since 2023, when the launch of ChatGPT jump started the AI engine. Investors
are questioning the returns from the billions of dollars the tech industry has spent on AI and want results.
- Not only does Nvidia face high expectations for the October quarter, when analysts expect revenue to jump 56% from last year, it faces skepticism over AI spending, Bank of America’s analyst Vivek Arya, says. Nvidia
is expected to comfortably generate more than $70 billion in net income this year.
- What management has to say about AI demand could be especially valuable. CEO Jensen Huang has already hinted that he could sell around $500 billion worth of his Blackwell chips, as well as a soon-to-be launched version called Rubin, by the end of next year.
- Huang may need to offer a sunnier view to restore confidence in the AI trade. It’s still unclear whether the White House will allow Nvidia to sell its next generation chips in China. And demand growth might slow if hyperscalers pare back their plans or buy cheaper chips from rivals.
- Wedbush analyst Dan Ives remains confident that Nvidia’s outlook can soothe market jitters and quiet some of the “AI bubble talk.” He said the report should be a positive catalyst for the sector into the end of the year.
What’s Next: Wall Street expects Nvidia to report earnings of $1.25 a share and revenue of $54.8 billion for the October quarter, according to FactSet. Data center revenue is expected to rise 58% from last year’s quarter, to around $48.8 billion.
—Martin Baccardax and Liz Moyer
The Fed’s Path Forward Is Getting Murkier For December
A divided Fed has left strategists with more uncertainty than normal about the path of interest rates. Traders see the chance of a rate cut at the December 9-10 meeting as basically a coin flip now, down from a two-thirds chance a week ago. The minutes of the October Fed meeting are coming.
- The minutes come out Wednesday, but already Fed officials have argued against a December rate cut in the past week. There’s now a 55% probability that rates hold steady in December, according to the CME’s FedWatch tool. Markets put a 44% probability on a quarter-point cut.
- October’s decision to cut by a quarter of a point had two dissenters: Fed governor Stephen Miran, who wanted a half-point cut, and Kansas City Fed President Jeff Schmid, who advocated no cut. Just a week ago, the market saw a 66% chance of a December rate cut.
- While the government has reopened it is unclear if and when some of the delayed economic data will be released. The Bureau of Labor Statistics will release the September jobs report this Thursday, but the White House says the October jobs report and consumer price index might never be released.
- In other Fed news, former governor Adriana Kugler, who resigned Aug. 1, reported stock sales and purchases that violated Fed policies and caused it to refer the matter to its inspector general, according to forms from the Office of Government Ethics that were made public on Saturday.
What’s Next: The timeline for the release of October jobs and inflation data is still unclear. The October consumer price index was supposed to come out on Nov. 13 and data collection during the shutdown has been a challenge. Any October jobs report probably won’t include the unemployment rate.
—Liz Moyer and Dan Lam
Retailers’ Holiday Spending Outlooks Will Be Highlight of Earnings
As retailers report third-quarter earnings, economists want to know their
plans for the holiday season amid inflation, tariffs, and economic anxiety. LendingTree found that Thanksgiving hosts expect to spend an average of $487 on food, drinks, and decor this year, up 13% from 2024.
