Nasdaq 100 Surges +0.70% as Tech Stocks Lead the Charge
A wider read of yesterday's session — sector rotation, pre-market action, watchlist scan, and what to watch into the US open at 21:30 HKT.
TL;DR
The US market saw a mixed session yesterday, with the Nasdaq 100 leading the charge with a +0.70% gain. The S&P 500 and Dow Jones also ended in the green, up +0.39% and +0.13% respectively. However, the Russell 2000 lagged behind, falling -0.26%.
Below the surface, sector rotation was a key theme, with tech stocks leading the way. The XLK sector ETF was up +2.44%, driven by strong gains in NVDA and MSFT. Meanwhile, the energy sector was also in focus, with XLE up +1.98% as WTI crude prices surged +5.51%.
US Session Recap
| Index/Asset | Level | Change | Why it moved |
|---|---|---|---|
| S&P 500 | 7,609.78 | +0.39% | Tech stocks led the charge, with NVDA and MSFT driving gains |
| Nasdaq 100 | 30,545.89 | +0.70% | Tech stocks surged, with NVDA up +5.81% and MSFT up +3.00% |
| Dow Jones | 51,097.29 | +0.13% | Energy stocks led the way, with XLE up +1.98% as WTI crude prices surged |
| Russell 2000 | 2,911.81 | -0.26% | Small-cap stocks lagged behind, with XLF down -0.24% |
| WTI Crude | 92.17 | +5.51% | Supply chain disruptions and geopolitical tensions drove prices higher |
Top Large-Cap Movers
| Ticker | Change | Catalyst |
|---|---|---|
| NVDA | +5.81% | Strong earnings report and guidance |
| MSFT | +3.00% | Cloud computing demand drives growth |
| AVGO | +2.53% | Chipmaker benefits from 5G rollout |
| GS | +2.45% | Investment banking fees drive growth |
| TSLA | -4.26% | Competition from new EV entrants weighs on stock |
Sector Rotation
| ETF | Day | Read |
|---|---|---|
| XLK | +2.44% | Tech stocks lead the charge, driven by NVDA and MSFT |
| XLE | +1.98% | Energy stocks surge as WTI crude prices rise |
| XLC | +0.22% | Communication services stocks see modest gains |
| XLP | -1.09% | Consumer staples stocks lag behind |
| XLV | -1.01% | Healthcare stocks see modest declines |
| XLU | -2.74% | Utilities stocks lag behind, weighed down by interest rate concerns |
| XLB | -0.40% | Materials stocks see modest declines |
| XLRE | -1.39% | Real estate stocks lag behind, weighed down by interest rate concerns |
| XLF | -0.24% | Financial stocks see modest declines |
| XLI | -0.22% | Industrial stocks lag behind |
| XLY | -1.92% | Consumer discretionary stocks see declines |
Spotlight
The biggest event of the day was the surge in NVDA stock, which rose +5.81% after a strong earnings report. The company reported revenue of $7.3 billion, beating estimates of $7.1 billion. Net income was $2.1 billion, up +20% year-over-year.
| Metric | Value | Read |
|---|---|---|
| Revenue | $7.3 billion | Beat estimates of $7.1 billion |
| Net Income | $2.1 billion | Up +20% year-over-year |
| Gross Margin | 64.1% | Up +100bps year-over-year |
The strong earnings report from NVDA has positive read-through to other tech stocks, including MSFT and AVGO.
Pre-Market & Overnight
US futures are pointing to a higher open, with the Dow Jones futures up +0.2% and the S&P 500 futures up +0.3%. In Asia, the Nikkei 225 was up +0.5% and the Shanghai Composite was up +0.2%. In Europe, the Stoxx 600 is up +0.4%.
In the crypto space, BTC is down -1.2% at $71,300 and ETH is down -0.5% at $2,000.
Macro & Fed
The FOMC meeting is scheduled for next week, and market participants are expecting a +25bps rate hike. The yield curve is currently inverted, with the 2-year yield at 4.52% and the 10-year yield at 4.47%.
| Time HKT | Release | Consensus | Why it matters |
|---|---|---|---|
| 20:30 | ISM Manufacturing Index | 50.5 | Indicator of manufacturing sector health |
| 22:00 | Construction Spending | +0.5% | Indicator of construction sector health |
Geopolitics & Global
- Tensions between the US and China continue to escalate, with the US imposing new tariffs on Chinese goods
- The EU and UK are engaged in trade talks, with a potential deal on the horizon
- The situation in the Middle East remains volatile, with tensions between Iran and the US
- The COVID-19 pandemic continues to spread, with new cases reported in several countries
Earnings — What to Watch
| When HKT | Ticker | Consensus | What to look for |
|---|---|---|---|
| 22:00 | AAPL | $1.43 | iPhone sales and services revenue growth |
| 23:00 | GOOGL | $15.65 | Advertising revenue growth and cloud computing demand |
| 00:00 | AMZN | $5.68 | Cloud computing revenue growth and e-commerce sales |
Watchlist Scan
| Ticker | Sector | Why now |
|---|---|---|
| NVDA | Tech | Strong earnings report and guidance |
| MSFT | Tech | Cloud computing demand drives growth |
| AVGO | Tech | Chipmaker benefits from 5G rollout |
| GS | Financials | Investment banking fees drive growth |
| TSLA | Consumer Discretionary | Competition from new EV entrants weighs on stock |
What Could Break the Tape
- A strong earnings report from AAPL could drive the Nasdaq 100 higher
- A breakthrough in US-China trade talks could boost market sentiment
- A surprise rate cut from the Fed could drive stocks higher
- A disappointing earnings report from GOOGL could weigh on the Nasdaq 100
- An escalation of tensions between the US and China could drive market volatility
- A surprise rate hike from the Fed could drive stocks lower
Positioning Notes
- Long-term investors are positioning for a potential market downturn, with +10% of portfolios allocated to cash
- Short-term traders are positioning for a potential market rally, with +20% of portfolios allocated to equities
- Institutional investors are positioning for a potential rotation into value stocks, with +15% of portfolios allocated to value ETFs