Nvidia's weight drives market volatility

Stocks rose on Wednesday – the move a direct result of all of the excitement surrounding the NVDA earnings that were due after the bell…. The report – a KEY test for markets as – as NVDA represent 8% of the S&P’s total value. (S&P = $55.7 trillion, NVDA = $4.48 trillion) - so the report has the ability to ‘move’ the markets…. To be clear – it is the highest percentage ever achieved by a single company. And that fact means that NVDA’s price fluctuations can (and sometimes do) disproportionately affect the broader market.

‘Substantial weighting’ means its earnings reports, guidance, or other significant news can trigger outsized market reactions. Recalling that on August 14, 2025, NVIDIA’s 8.2% rally drove 44% of the S&P 500’s surge, reversing a 1.6% intraday loss resulting in a gain of 1.1% for the index that day. Conversely, a disappointing earnings report (or what some thought was a disappointment) on February 27, 2025, led to an 8.5% drop in NVIDIA’s stock, erasing $274 billion in market value and dragging the S&P 500 and Nasdaq lower. Just to be clear – since that ‘disappointment’ – NVDA has rallied by 76%....and the S&P +17%.

Bottom line – they earned $1.05/sh vs. the expectation of $1.01, They recorded revenue of $46.7 billion – a 56% increase y/y, and a beat over the $46.2 estimate. And that is without any sales of the H20 chip to China. And here’s the rub….while gain in revenue was substantial, it was the ‘smallest percentage increase in more than 2 years’ – and so, they (traders) sold it off in the after-market – taking it down nearly 5% - which was less than the expected 6.5% projected by the options market. All very dramatic….

Data center revenues were the culprit – they only had sales of $41.1 billion vs. the estimate of $41.3 billion! Some suggesting that those results ‘hints that spending by giant data center operators (otherwise known as the hyperscalers – META, AMZN, MSFT, GOOG, CRWV) could tighten if AI applications remain difficult to quantify’. Just one side note – Huang rejected any idea that any AI infrastructure spend was softening – reminding us that the ‘opportunity is immense – predicting a $3 - $4 trillion AI infrastructure spend by the end of the decade’.

Ok – can we move on now…I own it, I never chased it (something I have been saying all along) and on any real pullback, I’ll buy more. Just to be clear – down 5% is not a real pullback. I’d say something north of 15 – 20% would be worth a look. And if it never does, I’m good, like I said I own it individually, and I own it via my exposure to the S&P total return ETF and I own it via investments in companies that benefit from using NVDA chips – and here’s the secret- so do you! This morning – NVDA is trading at $179.25 – down only $3 or 1.7%.

OK – we are now officially done with earnings season – investors will turn their attention back to focusing on the broader economic data sets that are in front of us. The next FOMC meeting is in mid-September – the markets are expecting a 25-bps rate cut. The July PCE report is due tomorrow, it is expected to be steady m/m while showing an increase in prices y/y…. The question is will it surprise us like the PPI did or will it come in line as expected? We will find out at 8:30 am tomorrow.

Today we are going to get the 2^nd revision to the 2Q GDP and that is expected to be revised higher at +3.1% from 3% (that’s good). Personal Consumption +1.6% (that’s good), Initial Jobless Claims of 230k – down from 235k (that’s good) and Pending Home Sales m/m at -0.2% but y/y of +0.1% (and that’s ok too!).

Bonds did very little yesterday leaving yields steady – the 10 yr yielding 4.23% - that is down from the trendline level of 4.34% (last week) and back to what has been recent support – so, for now we are in this 4.20% - 4.34% range and markets are ‘ok’ with that.

Oil remains solidly between the trendlines - $62.50/$64.50.

Gold has finally broken out and is up $17 at $3,465/oz. You can argue geo-political unrest, you can argue unrest at the FED (think Lisa Cook), you can argue the ‘safety trade’ and you can argue that central banks around the world are all buying gold, you can argue that the FED is readying to cut rates…..any of those will suffice……The point is, whatever your reason – gold is on the move again. The charts suggest that we could test the summer highs of $3525 before we stall. Downside is now the trendline at $3,410.

US futures are mixed after the NDVA report…. Dow +32, the S&P’s -2, the Nasdaq is -30 while the Russell is +7. (note that the 2 indexes that include NVDA are lower).

We are in the final week of summer – volumes will remain low which means moves will be exaggerated.

The S&P closed at 6,481 up 15 pts, closing at the all time high – something I referred to in yesterday’s note. I said that while we might kiss it – I think it gets rejected. – Today is the day to see if it gets rejected…..Remember - September is a volatile month that usually ends a bit lower….. The recent action shows that having a plan is important.

Charred brussel sprouts in a cashew cream sauce

A great side dish for any steak dinner.

For this you need shredded brussels sprouts, Olive oil, Chopped Cashew peanuts, Coconut milk, fresh lemon zest and lemon juice and s&p.

Begin by heating up a frying pan. When hot (this is key – heat the pan on the stove first), add the olive oil and the shaved sprouts. Season with s&p. Turn the heat to med - Sauté them around in the pan – until they start to brown…Now toss in the chopped cashews – toss…add in about ¾ c of coconut milk and allow thicken a bit. Add in a squeeze of lemon juice and a bit of the zest.

That’s it – all done. Now serve with your favorite steak.