It’s An AI Year

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In his Daily Market Notes report to investors, Louis Navellier wrote:

An AI Year

NVIDIA Corp (NASDAQ:NVDA) blows away the forecast, confirming the AI narrative. On to Powell tomorrow morning.

It’s an AI year.  If you can claim early traction in generating AI revenues, you’re having a very good year. The leader, by far, is NVIDIA, who just reported amazingly strong demand for its $40K AI chips.

There seems to be a bit of a hangover today as the semiconductor sector opened up strongly on sentiment but then rapidly fell into the red when NVIDIA, which soared to $513 after the earnings came in last night pulled back to as low as $475 as hot money who had positioned for strong numbers cashed in after the stock soared over $75 in the last week.

NVIDIA’s somewhat disappointing reaction of being up just over 1% given the blistering numbers and forecast, let alone their $25B share buyback program announced, has taken the steam out of the entire market, with the Dow sliding into the red falling 225 points from its initial run-up. After the first hour of trading, all the major indexes are in the red.

Consumer Spending Concerns

There’s more grief for retailers today, with Dollar Tree (NASDAQ:DLTR) reporting beats top and bottom, albeit earnings were still down 38% y-o-y, and the stock is down almost 10% on the day, wiping out its entire year’s gains. Bath & Body Works (NYSE:BBWI)  is much the same; hit the top line, beat the bottom, and the shares are down 6% today, (-21% YTD). Concerns about consumer spending continue.

Stocks’ weakness today can’t blame interest rates which are only up slightly on the day. Crude has dropped below $79/bbl.

No Overcoming August Weakness

The rally this week off the near-term August 17th low appears to be fading, but the focus is clearly on Jay Powell speaking tomorrow. Last year he spoke of pain and really accelerated the sell-off into the October lows. No one expects anything like that this year, but there is certainly anxiety that he may spin a hawkish tone and swing hopes that the Fed might be done with a possible cut by year-end, to one or two more increases possible in ’23.

With NVIDIA not able to boost itself or the market with such strong earnings, and retailers with beats trading down, investors are a bit confused this week on what it will take to overcome the seasonal weakness of August. 

Coffee Beans: Airbnbear

A bear broke into a California man’s apartment, foraged for food, wrecked his TV, and took a nap on his bed. Source: UPI. See the full story here.