Technology bulls were treated Tuesday to a big upgrade for shares of Nvidia (NVDA), and still, they could not move the needle for the index. The Nasdaq 100 closed at 13,092, essentially flat on the session, states Jon Markman, editor of Strategic Advantage.
Bulls did start off better, though. Analysts at HSBC in Asia are now all in for Nvidia, re-rating the stock as a “buy” and lifting the price target to $355. A month ago, the researchers had the AI chip darling rated as “underweight”. The upgrade stems from pricing power. HSBC analysts believe that a shortage of AI chips puts Nvidia in a good position to increase profit margins. Bears hope that waning profitability across big tech will be in the spotlight through the current earnings season.
After the close Netflix (NFLX) reported financial mixed results and shares sunk about 3.5%. However, that weakness did not seem to impact the rest of the Nasdaq 100. The benchmark index remains mired in a narrow trading range. The bottom is 12,895, the rising 20-day moving average.
I expect bulls will buy any near-term decline to that level. The top of the range is 13,200. Despite reaching that level on Tuesday, bulls could not press through. Be patient, the trading range will be resolved soon.
MCI Market Timing Engine
Members following this model are currently in cash or cash equivalents. Our model expects a summer rally, but the path has been choppy so far. I plan to recommend taking advantage of any near-term weakness to re-enter a leveraged Nasdaq 1000 position. I will send an intraday update when appropriate.
Behind the Headlines
The Dow and the Nasdaq were little changed at 33,976.6 and 12,153.4, respectively. Industrials and energy posted the biggest gains among sectors, while health care and communication services logged the steepest declines.
Breadth favored decliners four-three. There were 174 new lows vs 186 new highs. The new-high leaders were NVIDIA (NVDA), Oracle (ORCL), AstraZeneca (AZN), McDonald’s (MCD), and Salesforce (CRM).
Goldman Sachs' (GS) first-quarter results declined while revenue missed market expectations, as the investment banking company took a $470 million hit from the partial sale of a consumer loans portfolio. Shares fell 1.7%, the second-biggest drop among Dow components.
Bank of America's (BAC) first-quarter results surpassed Wall Street's expectations as the benefit of higher interest rates more than offset revenue declines in investment banking and asset management, while the bank prepared for a mild recession in the third quarter. The bank's shares rose 0.6%.
Johnson & Johnson (JNJ) raised its full-year outlook after the healthcare products conglomerate reported better-than-expected first-quarter results, driven by growth across all of its segments. The company's stock fell 2.8%.
The US two-year yield rose 2.6 basis points to 4.21%, while the ten-year rate fell 1.4 basis points to 3.58%.
In economic news, housing starts in the US last month nudged down 0.8% to a seasonally adjusted annual rate of about 1.42 million units, the Census Bureau and the Department of Housing and Urban Development said. The consensus on Econoday was for a 1.4 million print, following a downwardly revised 1.43 million reading for February. Annually, starts dropped 17% in March.
