Monday, April 27, entered Wall Street’s annals as a time of cautious optimism and anticipation.
The Big Five under scrutiny. A moment of truth for the market
The S&P 500 index gained a modest 0,12%, ending the day at 7,173 points. Meanwhile, Nasdaq rose by 0,20% to 24,887 points.
These numbers may seem unimpressive, but the perspective is key.
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The S&P 500 has risen more than 100% since the bull market began in October 2022. That spectacular result has led fund managers such as Robert Pavlik of Dakota Wealth to loudly question whether such levels can be sustained at all.
The answer will come this week, as the market awaits the crucial marathon of quarterly earnings from the so‑called Great Seven, which includes: Amazon, Alphabet, Meta, Apple, Nvidia, Tesla and Microsoft.
These companies account for almost 44% of the total capitalization of the S&P 500. The upcoming quarterly results will be a sort of test answering whether massive AI infrastructure spending is starting to generate real profits.
Chart. S&P 500 index price
Source: TradingView.
It is worth noting here that so far the earnings season looks solid.
Of the 139 S&P 500 companies that released reports, 81% beat analysts’ expectations. The aggregate earnings growth is currently estimated at 16,1% year‑over‑year.
This is a much better result than the forecast at the beginning of April of 14.4%.
Chart. Nasdaq Composite index price
Source: TradingView.
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Nvidia shares back on top. What next?
Does the market still believe in a silicon future? Well, just look at the trading of the GPU and AI chip giant’s H100 and Blackwell units.
Nvidia shares jumped on Monday by 4%, continuing the rally from the previous session.
As a result, Nvidia achieved a valuation exceeding astronomical 5 billion USD. That level, a few years ago, seemed almost purely abstract. Today it is a litmus paper for sentiment across the entire tech sector.
Nvidia has transformed from a known maker of gaming graphics cards to a global AI architecture giant.
The communications services sector is also doing well, as evidenced by the Verizon stock price, which rose by 1,5% after raising annual forecasts. On the other hand, Domino’s Pizza faced a setback, with its shares falling as much as 8.8% after first‑quarter sales disappointed analysts.
This paints a very clear picture: the market is merciless for anyone who fails to deliver the expected results, especially in a time of tightening consumer budgets.
On April 28, Nvidia’s share price was 216 USD.
Chart. Nvidia share price
Source: TradingView.
See also: Nvidia shares up 37% since January! The market reacts to the AI giant’s results and forecasts.
Fed and geopolitics, the bumpy road to stability
While algorithms and traders analyze profit bars of individual companies, heavy macroeconomic factors hang over the market.
It’s not just the war in the Middle East, but also the two‑day Fed meeting starting today.
Investors will look to Jerome Powell for answers on how the U.S. and Israel’s war with Iran and the related energy crisis will affect the inflation path.
If the Fed believes that inflationary risk is again slipping out of control, optimism on Wall Street could quickly evaporate.
It is worth noting that trading volume on U.S. exchanges on Monday, April 27, was 15,59 billion shares, which is below the average of the last 20 days (18.28 billion).
The classic market picture, waiting for a signal to attack or flee.
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