Nvidia & Fed
NAS100 is having an amazing year, with gains of more than 40% during the January-July period, driven largely by the generative Artificial Intelligence (AI) boom and the slowdown in the pace of tightening by the Fed. Both of these themes are in the spotlight this week and will likely determine the trajectory of the tech-heavy index.
Artificial Intelligence (AI) has emerged as the main battlefield in Silicon Valley, after OpenAI launched ChatGPT, a conversational AI chatbot. Nvidia has enabled the AI revolution, since its GPUs are the standard in development and deployment of such applications and already reaps the benefits. Its stock has more than tripled in the first seven months of the year, easily outperforming the rest of the Magnificent Seven (Meta, Apple, Microsoft, Alphabet, Amazon, Tesla).
In its last report in late-May, Nvidia had offered strong Revenue guidance for Q2 FY2024, which will be reported on Wednesday. The firm expects sales to rise 11% q/q to $11 billion, due to increased demand for its AI infrastructure. The bar is high and the results can set the tone for the tech sector.
Markets will also be looking forward to the Fed's Jackson Hole Symposium, which kicks-off later this week, with Chair Powell's speech expected on Friday. His comments will be closely watched, as investors try to assess the next steps, at a time when global monetary policy is highly uncertain. Officials have already delivered 525 basis points of hikes and Inflation is coming down, but the economy is strong and the labor market hot, despite sign of easing. Mr Powell has not committed around the next moves, keeping more tightening as well as a hold in play.
NAS100 comes from its third straight losing week, as strong economic data and hawkish Fed minutes support the higher-for-longer mantra and markets have pushed back expectations around the timing of rate cuts. This has made the index vulnerable to the critical 14,336-14,220 region, but strong catalyst would be needed for further losses below it.
Despite the recent weakness, NAS100 returns to profits this week, limiting the correction to the 38.2% Fibonacci. It tries to retake the EMA200 (black line), which would shift immediate bias to the upside and bring the 2023 highs to its crosshairs (15,946).
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.