Key Takeaways
- Nvidia Surges
- Tesla Makes Inroads In EV Charging
- Stronger Than Expected Economic Data
- Debt Ceiling Deal Near?
The S&P 500 was up just under 1% and the Nasdaq Composite gained 1.7%, but that was hardly the story on Thursday. Chip stocks continued their run, led by a stronger than expected earnings report from Nvidia which sent that stock higher by more than 24%.
If there is a story stock this year, it’s hard to make a case stronger than that of Nvidia. Up nearly 160% for the year, the chipmaker now boasts a market cap of $938 billion, putting it in a league with market leaders such as Apple and Google. AI continues to be the catalyst for gains, acting like a firm mattress that can take the weight of the entire market. In fact, this morning Marvell Technologies is out with their earnings, saying they expect AI revenue to double. That stock is up 18% in premarket.
Other stocks making news today include Tesla and Ford. Tesla will open some of their fast charging stations to Ford electric vehicles. 12,000 of the Superchargers, as they are known, will be made available to Ford customers, giving Tesla an even stronger hold in the EV charging space.
The Gap announced earnings after the close on Thursday, beating expectations. The retailer said it improved margins thanks to lower freight costs, a reduction in excess inventory and layoffs announced earlier this year. Shares are up 14% in premarket.
Meantime, shares of Ulta Beauty and Costco are under pressure following disappointing earnings. The theme of same store sale misses has really plagued retailers and was something we heard from both of these companies as well. Shares of Ulta are indicated lower by 8% while Costco is trading down 0.4% in premarket.
Lastly, Walgreens announced this morning it will cut 500 jobs or 10% of its corporate workforce. While layoffs are nothing new this year, we still have yet to see a real softening in the labor market. We’ll see if that trend continues next week when May’s employment report is released.
Turning to the overall economy, this latest Personal Consumption Expenditures (PCE) Index is out. On a year over year basis, Core PCE was up 4.7% vs. expectations of 4.6%. Month over month, the index gained 0.4% vs. expectations of 0.3%. As the Fed’s preferred gauge on inflation, the stronger than expected numbers will certainly factor into any decision on interest rates at next month’s FOMC meeting. Currently, there is a 41% chance of rates increasing by a quarter point. Keep in mind, just a few weeks ago we were at nearly 100% chance the Fed would stand pat in June.
It appears law makers may be close to settling the debt ceiling. Overnight, positive news was released that progress was being made on a two year spending deal. Optimism on a potential deal has helped keep stocks in striking distance of that 4200 resistance level in the S&P 500. It will be interesting if a deal is reached whether or not stocks finally break through 4200 or if it’s a sell the news event. In the meantime, I would stick with you investing plan and long term objectives.
Finally, as we head into the long weekend, I want to take a second to remember the reason for Memorial Day. Despite it being a seemingly great reason for mattress sales, this is a holiday to remember those who served and lost their lives in the process. Those sacrifices are why we have things like free markets and I just want to recognize the brave men and women we have lost over the years.
tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.
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