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AI broadening, Nvidia earnings, ether ETFs: Trading takeaways

The S&P 500 (^GSPC) and Nasdaq (^IXIC) closed at record highs ahead of Nvidia's (NVDA) first quarter earnings. Yahoo Finance's Josh Schafer joins Asking for a Trend to discuss some of the biggest takeaways from the trading day.

AI has been dominating the market, and the utilities sector has been getting a boost as demand for new data centers increases. Utilities and energy are outperforming the S&P 500, and AI has become a leading topic in earnings across all sectors.

All eyes are on Nvidia, which is set to report earnings after the bell on Wednesday. The chip company faces sky-high earnings expectations as the AI race heats up, closing at a record high on Tuesday.

Finally, Schafer points to optimism around the potential SEC approval of ether ETFs as a major takeaway from the trading day. Bitcoin ETFs were approved earlier this year, and renewed enthusiasm for ethereum caused a significant rally.

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For more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.

This post was written by Melanie Riehl

Video transcript

Moving on a record day for the S and P 500 the NASDAQ and a video just ahead of earnings.

Josh Schafer is here with the trading takeaways.

Joshua Josh It's all about a I this week.

We can't talk anything without talking a I and specifically today, looking at some of the movers in the market with utilities weeding, we've been talking a lot about how a I and utilities have been linked recently.

Also a I and energy.

So when you take a look at the top performing sectors in the S and P 500 this year, two of those are utilities and energy.

They've been outperforming the S and P 500.

And one thing that's been interesting to look at when you take a look at that, Josh is sort of how companies are starting to talk about A I more so when you look at earnings calls here.

This was interesting, highlighted by Goldman Sachs energy companies mentioning a I.

This is a little a I on everything.

This is the fourth quarter.

Less than 20% of companies are talking about a I fast forward to the first quarter of earnings which is the quarter We just went through over two thirds of companies talking about a I So people have been talking about a I sort of being an energy trade, right?

How are you gonna power these GP US?

They take a lot of power.

Well, companies are saying yes, that's gonna benefit us.

Also, people believe it's gonna benefit companies in the utility sector.

So this is something I'm watching headed into tomorrow's NVIDIA Irvings report.

When you sort of think about OK, NVIDIA, it's gonna talk a lot about a I demand demand for their A I chips right.

But when they talk about that demand, what does that mean for sort of the broader rally that we've seen in other sectors?

And I guess in some ways or other sectors also gonna move the same way that chips usually move with NVIDIA and tech moves with NVIDIA after these earnings, are we gonna start to see other pockets in the market that have been a hot A. I trade also kind of trade off that trend a little bit after your point.

Josh is, let's say in video reports on the conference call tomorrow.

CO Jensen Wong sounds very bullish about the quarters head.

Does that have kind of a a positive ripple effect for some energy names?

Utilities, right?

Yeah.

At some point, if they're gonna sell, if they think they're gonna keep selling more and more GP US.

Right, Well, that means more and more power.

I mean, I don't know what specific companies and we could have strategies on that can debate that with us.

Right?

What companies are gonna be powering that?

But at some point, the power has to come from somewhere.

Morgan Stanley was out saying that these GP US take 50 X the amount of power that other GP US used to take.

So a massive amount of power being taken in for these new GP US.

Let's go to the next Schafer take away.

Our other takeaway is just simply NVIDIA's make or break moment.

And I think when you look at markets today, we're sort of wondering where the catalyst was for the markets.

There was a little bit of just kind of a drift to find, trying to find some direction.

It feels like it's like AC P I week, right?

Like we're gonna have an inflation print tomorrow or jobs Friday Labour report on Friday.

But it's NVIDIA's earnings like that is the moment this week you take a look at options volatility headed into this and sort of what they're pricing in.

It's pricing in an 8% move for NVIDIA after earnings.

Most interesting to me, out of that was how inaccurate that has been over the last couple of quarters pricing in a pretty sizable move, we haven't always seen that with video.

You're not a great predictor.

It's not a great predictor.

And I think that gets to sort of this A. I trade of.

It's hard to understand kind of where it's gonna go next, and also when investors have have had enough and video closed at a record high to that, it wouldn't be abnormal for a stock to close at a record high, have very solid earnings, maybe even raise guidance.

But still, the stock doesn't go up because again, it's already at its highest level ever, 90% already this year it doesn't go up automatically, right?

And then we take a look at our third takeaway.

Something a little different.

Ethereum, Ethereum ETF optimism.

Josh.

So this is optimism around potential SEC approval.

And I found this chart interesting.

So Bitcoin obviously ETF S were approved earlier this year.

When you take a look at January Bitcoin actually went down a little bit at first on this news, but it's had a very solid rally Bitcoins in purple here since then And you've heard a lot of positives about the inflows these ETF S have seen.

And I think it was interesting to me to sort of take in crypto essentially moving on real news today.

So when you look at the light blue line, that's right next to me Here, look at this massive jump.

Ethereum was lagging Bitcoin on the year by 20% going into today, and it just rallied by 20% in the day.

So a massive move for ethereum.

And if you're wondering what the basically what's it worth to have ETF S approve?

Yeah, The market says it's worth about this much.

Not a bad thing, you know.

S ECs Gary against He didn't want that spot.

Bitcoin ETF It took a lawsuit right now.

So is it gonna take a lawsuit to get your spot?

A theory in ETF.

And if it does, it would take quite a long time.

Right.

So the market kind of aggressively pricing something in off one day and a little bit of rs.

Joshua.

Thank you.