Dow Jones, Nasdaq, S&P 500 weekly preview: Nvidia to report

© Reuters Dow Jones, Nasdaq, S&P 500 weekly preview: Nvidia to report

The S&P 500 (SPX) continued to rally last week as risk assets have surged since yields on U.S. Treasuries started to drop in late October. The index closed 2.2% higher last week to secure the first close above 4,500 since August.

Stocks are in a rallying mood on hopes the Federal Reserve might resort to cutting interest rates as inflation shows signs of cooling. The softer-than-expected October CPI prompted markets to nearly fully price out additional Fed hikes.

The S&P 500 achieved its third consecutive week of gains, marking its lengthiest weekly winning streak since July.

Last week, Federal Reserve Vice Chair for Supervision, Michael Barr, reiterated the likelihood that officials are either at or close to concluding their tightening measures. However, Federal Reserve Bank of San Francisco President, Mary Daly, expressed uncertainty among policymakers regarding whether inflation is progressing toward their 2% target.

Nasdaq Composite Index (IXIC) added 2.4% while the Dow Jones Industrial Average (DJI) closed 1.9% higher.

Nvidia (NASDAQ:NVDA) takes the center stage

For this week, investors will be watching closely the November FOMC meeting minutes, which are out on Wednesday.

“The Fed now has diminishing returns on hawkish rhetoric, given that it has been on hold since July. One point of interest in the minutes will be any discussion of the nature and impact of financial tightening whether it was exogenous or not to Fed expectations,” said analysts at Bank of America.

On the earnings front, the highlight will be Nvidia (NVDA), which reports on Tuesday after market close. On Monday, Zoom Video (NASDAQ:ZM) is due to report. Other notable reporters include Lowe’s (NYSE:LOW), Medtronic (NYSE:MDT), Analog Devices (NASDAQ:ADI), Autodesk (NASDAQ:ADSK), Baidu (NASDAQ:BIDU), HP Inc. (NYSE:HPQ), Best Buy (NYSE:BBY), Dick’s Sporting Goods (DKS), and Deere (NYSE:DE).

What analysts are saying about US stocks

Analysts at Sevens Report: “The three pillars of the rally remain in place and while in the short term, according to fundamentals, the market is a bit “over its skis” there remains important support for stock prices and the chances of a sustained decline remain low.”
Analysts at Oppenheimer: “We expect the market to advance until the Fed cuts its policy rate—this could still be 6-12 months away.”

Analysts at JPMorgan: “We believe that bond yields are set to move lower, and we thought the knee-jerk equity reaction to peaking bond yields is a positive one, but also that this is unlikely to last.”

Analysts at Roth MKM: “The equity market has entered a seasonally strong week on the calendar, but the recent softer economic data does lead to some concern. We find it interesting that the equity market, which has a horrible record of correctly forecasting what the Federal Reserve will do with interest rates, has acted as well as it has given the “potential rate cuts” next spring.”

Analysts at Evercore ISI: “No matter the reaction to NVDA – base case break above $500 or retest of $400 – SPX is likely to have a material move. Notably, options markets are priced attractively for movement up, down, or both ways.”