Nvidia’s valuation has skyrocketed to $4 trillion, making up almost 8% of the S&P 500. As investors await its earnings report next week, they’re also watching for signs of a bubble in AI and potential shifts in monetary policy from the Federal Reserve.
The tech giant’s dominance in high-powered chips used for AI has drawn comparisons to other industry leaders like Apple and Microsoft. Analysts expect Nvidia’s financial results to impact these companies as well.
According to recent options activity, investors anticipate a 0.8-percentage-point move in the S&P 500 on Friday, depending on Fed Chair Jerome Powell’s speech at Jackson Hole. Prices for next Thursday imply a similar move of 0.9 percentage points.
The significance of Nvidia’s earnings can be seen in its impact on the market relative to other major economic data and central bank activity. “Nvidia’s earnings is the largest event for the S&P 500 for the next month,” said Stuart Kaiser, an equity strategist at Citi.
Meanwhile, Powell’s address this week could shift investors’ expectations for monetary policy and interest rates, which are crucial inputs for modeling the economy and stock market. The Trump administration has called on the Fed to lower interest rates rapidly, but the central bank has resisted, citing risks of heating up the economy and stoking inflation.
Source: https://economictimes.indiatimes.com/news/international/us/are-nvidia-stocks-the-single-biggest-factor-behind-us-stock-markets-swing-investors-will-be-surprised-to-details/articleshow/123436369.cms?from=mdr