Where we are: S&P 500 futures are trading around 5320, modestly higher on the session, in line with premarket gains. This puts the index above yesterday’s close but still within the recent trading range. The overnight session saw limited volatility, consolidating after yesterday’s cautious retreat driven by rising bond yields.
What’s driving it: The market’s primary focus is squarely on Nvidia’s earnings after the close, which will either validate or undermine the AI-driven rally that has been a major support for the S&P 500 this year. Rising real yields are creating a headwind for risk assets, with the US 10Y real yield now at 2.13%. Additionally, the market is awaiting the release of the FOMC meeting minutes at 14:00 ET, which could provide further insights into the Fed’s thinking on inflation and interest rate policy.
- Nvidia’s performance is seen as a bellwether for the tech sector and broader market sentiment.
- Rising 10Y real yields are increasing the opportunity cost of holding equities.
- The modestly short positioning among non-commercial accounts suggests potential for a squeeze if Nvidia delivers a strong earnings report.
NY session focus: The main event is the release of the FOMC meeting minutes at 14:00 ET. Traders will be scrutinizing the minutes for any clues about the Fed’s tolerance for inflation and potential shifts in the policy outlook. Key levels to watch are 5300 as support and 5350 as resistance. The trade that’s working is a long-Nvidia gamma squeeze, but the trade that’s at risk is a broad equity long if the minutes signal a hawkish Fed. The pain trade is a hawkish surprise in the Fed minutes combined with disappointing guidance from Nvidia, triggering a sharp sell-off in equities.