Monday, November 18, 2024

Market indexes fought back from a temporary dip into the red this morning, with every major index aside from the Dow closing in the green to start a new trading week. The Dow closed -55 points, -0.13%, while the small-cap Russell 2000 saw a mirror image today, +0.13% on the session. The S&P 500 and Nasdaq finishes +0.39% and +0.60%, respectively.

Bond yields simmered down today after last week saw both the 10-year and the 2-year creep up toward the mid-4s. This was seen as a warning that the economy — and therefore interest rates — might not have been coming down as swiftly and uniformly as previously expected. The 10-year hovers at +4.420% at this hour and the 2-year is +4.287%.

Markets are back to seeing a post-election stock market reducing regulations and letting valuations ride higher. With Republicans now in control of both houses of Congress as well as the White House, another top-down tax cut may be anticipated here, as well.

NVIDIA Shares Down on Overheating Chips?

The story today for NVIDIA NVDA, which reports Q3 earnings this Wednesday afternoon — concluding another earnings season for the so-called “Magnificent 7” — sold off below $140 per share this morning, closing down -1.2% on the day. Reports that new enterprise AI Blackwell chips were having overheating issues, and for a stock priced for perfection, this was taken seriously.

That said, Blackwell chips remain in very high demand, and issues regarding the overheating of these chips won’t be taken overly seriously unless these sorts of complaints persist. As with any new technology, disruptions do occur. As of now, we remain agnostic on this being a potential problem for NVIDIA.

The company is riding a seven-quarter earnings winning streak currently, with Q3 earnings expected to come in +85% year over year on revenues expected +81%. Not bad for a company that last month surged into first place among all publicly traded companies in terms of market capitalization. NVIDIA currently has a Zacks Rank #1 (Strong Buy), and shares are +190% year to date.

Homebuilder Confidence Rises for November

Again, regulatory relief has led to a sunnier outlook for homebuilders today, as the North American Homebuilders (NAHB) survey came in at 46 this month, above expectations of 43 and the strongest print since the 51 we saw back in March and April of this year. Back in August, with the threat of higher mortgage rates for longer, the NAHB survey came in at a paltry 39.

Tuesday morning, we’ll see more homebuilding metrics added to the equation: Housing Starts and Building Permits for October will hit the tape, expected at a still-low 1.34 million seasonally adjusted, annualized units. Permits are expected to tick up month over month to 1.44 million units. Any surprise to the upside will be welcomed by homebuilder stocks, although may increase concerns that the economy is not cooling to the extent expected.

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