Markets climb higher but Nasdaq slides after Nvidia earnings

Dow rebounded 370, advancers over decliners an impressive 4-1 but NAZ lost 77.  The MLP index gained 3+ to 300 & the REIT index was up 2+ to the 245s.  Junk bond funds edged higher & Treasuries saw very limited buying & rates eased lower.  Oil went up 1+ to 70 & gold jumped 19 to 2671.

Dow Jones Industrials

Nvidia (NVDA) shares whipsawed as investors reacted to the chipmaker's 3rd-qtr earnings.  Investors were reacting to its latest quarterly results, which beat on both the top & bottom lines.  Revenue came in at $35.08B, up 94% year-on-year & exceeding the $33.16B forecast.  EPS was 81¢ adjusted, also above analyst expectations.  The broader semiconductor space got a bump higher.  NVDA has largely cornered the market for the high-powered chips powering the world's most advanced artificial intelligence models, such as OpenAI’s ChatGPT.  Despite nearly doubling sales year-on-year, its 3rd-qtr results showed a slowdown from previous qtrs.  NVDA previously reported growth of 122% in the 2nd qtr, 262% in the first qtr & 265% in the 4th qtr of 2023.  William de Gale, lead portfolio manager of BlueBox Asset Management’s global technology fund, said the problem for NVDA as a stock is that “insane” GPU demand has become the “bare minimum” expected of the company.  There is a risk here … that Nvidia’s current overearning will begin to come to an end,” he said.  “There’s considerable risk in this name at the moment. But it’s exciting,” he said.  Analysts are looking ahead to the much-anticipated launch of iss next-generation chip called Blackwell. CEO Jensen Huang said that demand for the chip is exceeding supply.  The stock fell 1.64.

Nvidia shares fluctu.64.ates as investors digest third-quarter earnings

A sharp drop in mortgage rates brought homebuyers off the fence in Oct after a slow summer.  Sales of previously owned homes last month rose 3.4% from Sep to a seasonally adjusted, annualized rate of 3.96M units, according to the National Association of Realtors (NAR).  Sales were 2.9% higher than Oct of last year, marking the first annual increase in more than 3 years.  This count is based on signed contracts, meaning most of the deals were made in Aug & Sep.  During that time, the average rate on the popular 30-year fixed mortgage was falling.  It started Aug around 6.6% & dropped to a low of 6.11% by mid-Sep, according to Mortgage News Daily.  “The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions,” said Lawrence Yun, NAR's chief economist, in a release.  “Additional job gains and continued economic growth appear assured, resulting in growing housing demand. However, for most first-time homebuyers, mortgage financing is critically important. While mortgage rates remain elevated, they are expected to stabilize.”  Tight supply continues to put upward pressure on prices.  The median price of an existing home sold in Oct was $407,200, an increase of 4% from the year before.  By price category, the higher end of the market is seeing more activity than the lower end.  “We still need another 30% in inventory just to get us back to the pre-Covid conditions,” Yun added.

Home sales surged in October, just before mortgage rates jumped

Pres-elect Trump & Federal Reserve Chair Jerome Powell could be on a policy collision course in 2025 depending on how economic circumstances play out.  Should the economy run hot and inflation flare up again, Powell and his colleagues could decide to tap the brakes on their efforts to lower interest rates.  That in turn could infuriate Trump, who lashed Fed officials including Powell during his first term in office for not relaxing monetary policy quickly enough.  “Without question,” said Joseph LaVorgna, former chief economist at the National Economic Council during Trump's first term, when asked about the potential for a conflict.  “When they don’t know what to do, oftentimes they don’t do anything. That may be a problem.  If the pres feels like rates should be lowered, does the Fed, just for public optics, dig its feet in?”  Though Powell became Fed chair in 2018, after Trump nominated him for the position, the 2 clashed often about the direction of interest rates.  Trump publicly & aggressively berated the chair, who in turn responded by asserting how important it is for the Fed to be independent & apart from political pressures, even if they’re coming from the pres.  When Trump takes office in Jan, the 2 will be operating against a different backdrop.  During the first term, there was little inflation, meaning that even Fed rate hikes kept benchmark rates well below where they are now.  Trump is planning both expansionary & protectionist fiscal policy, even more so than during his previous run, that will include an even tougher round of tariffs, lower taxes & big spending.  Should the results start to show up in the data, the Powell Fed may be tempted to hold tougher on monetary policy against inflation. 

Trump and Fed Chair Powell could be set on a collision course over interest rates

US stocks whipsawed as investors digested NVDA''s earnings.  Those earnings suggests a revenue boost is just being pushed down the road until the issues ease, some analysts suggested, given the shortage of sizable competitors in AI chipmaking.