Apple, Nvidia Signal a Positive Start to a Short Trading Week

* Starting a short trading week with equity futures taking cues from Apple and Nvidia.

* Today’s Fed speakers will add to calls for several months of data before rate cuts.

* A quick check on oil and our XLE shares.

We kick off a compressed set of trading days this week, which will also end the month of May. Month to date, the market regained ground last in April with the S&P 500 up 5.3% and the Nasdaq Composite up 8.1%. In Friday’s Roundup, we discussed how AI-related stocks had a strong hand in that following Nvidia’s NVDA beat and raise earnings report last week. Quarter to date, those market barometers are up 11.2% and 12.7% respectively, while the Dow and Russell 2000 trail behind, up just 3.7% and 2.1%.

With no market moving earnings reports out before equities started trading today, equity futures pointed to a positive start to the last week of May trading. Providing some lift are reports Apple’s AAPL iPhone shipments in China rebounded 52% amid a flurry of discounts from retail partners. As a reminder, AAPL shares account for ~6.1% of the S&P 500 and ~10.0% of the Nasdaq Composite. That report should also provide some lift for our shares of Qualcomm QCOM and Universal Display OLED.

Also helping lift equity futures are NVDA shares, which were up some 3% in premarket trading. That likely stems from the market further adapting to recent price target increases, but also another boost to calendar consensus earnings expectations. The market now sees Nvidia delivering EPS of $25.82 this year, up from its prior forecast of $24.12, and $12.14 delivered in calendar 2023. 

Following Nvidia’s earnings last week, the market consensus for 2025 has been upped to $34.97 from the prior $31.84, implying the company will grow its EPS by more than 160% over the 2023-2025 period. We’ll have more on this as well as other EPS changes for our holdings later today.

More Fed Speakers Signaling Several Months of More Data Needed

We have a rather light economic calendar as well, but no shortage of Fed speakers ahead of Friday’s April PCE Price Index data. Last week’s Flash May PMI report from S&P Global showed the manufacturing and services components of the economy re-accelerated with favorable order growth pointing to more of the same in the coming month. Both input costs and output prices meanwhile rose at faster rates, with manufacturing having taken over as the main source of price growth over the past two months.

Those findings help explain recent comments from Fed officials calling for several more months of data to see further and sustained progress on inflation before cutting interest rates. Early this morning, Minneapolis Fed President Neel Kashkari shared the central bank could potentially see  rate hikes if inflation fails to come down further.

Kashkari will speak again today at 9:55 am ET with Fed Governor Cook and San Francisco Fed President Mary Daly both speaking at 1:55 pm ET today. Last week we saw September rate cut expectations soften considerably, and odds are today’s comments will have a similar effect. Our position continues to be we’re likely to see one rate cut late this year, but we’ll continue to follow the data.

Measured against the European Central Bank and the Bank of England which are much closer to cutting rates, we are likely to see the dollar remains strong, a headwind for multinational companies.

A quick check on oil and our XLE shares

Oil prices are moving higher this morning, and while some of that may be due to favorable Flash May PMI data, we are reading that OPEC+ will extend output cuts through the second half of the year. Should we see upcoming data on China’s economy show stimulus efforts are bearing fruit, we could see the oil conversation return to one about a supply-demand imbalance.

We’ll continue to maintain the portfolio’s position in the Energy Select Sector SPDR Fund XLE shares. 

At the time of publication, TheStreet Pro Portfolio was long XLE, NVDA, AAPL, QCOM, OLED,