The S&P 500 Index (SPX) wrapped up last week at $7,680, marking a modest 0.5% gain. To begin with, the tech sector continues to be the main source of strength for the US market. NVIDIA stepped up to the plate with its quarterly earnings and forward guidance, making it crystal clear that demand for artificial intelligence (AI) infrastructure won't let up anytime soon. In fact, the chipmaker now expects roughly 70% revenue growth next year, which is well above the 40% threshold analysts had predicted.
Unsurprisingly, Wall Street wasted no time responding. NVIDIA shares shot up 8.7%, while the broader tech sector within the S&P 500 Index climbed 3.4%.
That said, the Federal Reserve's (Fed) monetary stance is still a major speed bump. At Jackson Hole, Chairman Kevin Warsh made it abundantly clear that the central bank won't let its guard down on inflation unless it sees convincing proof that the 2% target is within reach. His remarks sent a ripple through the markets, with the probability of a September interest rate hike rising sharply. On Friday, SPX slipped 0.25%, as investors began to price in the prospect of higher borrowing costs. Still, the overall reaction has been measured—strong corporate earnings continue to offset rate-related jitters, at least for now.
Geopolitics is adding another layer of uncertainty for investors. The intensifying standoff between the United States and Iran has already pushed Brent crude above $90 per barrel, threatening to reignite inflationary pressures and bolster government bond yields. This week, all attention turns to American jobs numbers. If the data comes in on the weaker side, it could take some heat off the Fed and give stocks a new reason to rally.
The ultimate recommendation is to buy SPX at the current price ($7,680), targeting $7,815 within two weeks. To keep risk in check if the market moves against us, place a Stop Loss order at $7,635.
This content is for informational purposes only and is not intended to be investing advice.
