Nasdaq Rallies on Nvidia Earnings as PCE Inflation Report Looms

The stock market spent Thursday in a state of productive uncertainty. Nvidia's earnings report sent the chip giant soaring 14 percent, dragging the broader semiconductor sector along with it and giving the Nasdaq a lift toward its 21-day moving average. But the gains came with friction. The market opened strong, faded to losses by midday, then recovered again—the kind of whipsaw that left traders watching the clock as much as the tape. By day's end, the Dow Jones Industrial Average had climbed 0.3 percent, the S&P 500 rose 0.5 percent, and the Nasdaq composite gained 0.7 percent. The Russell 2000 also advanced 0.7 percent. It was a session that looked better in hindsight than it felt in the moment.

After hours, the momentum stalled. Dow Jones futures edged down 0.1 percent against fair value, S&P 500 futures lost 0.1 percent, and Nasdaq 100 futures fell 0.25 percent. The weight came partly from Boeing, which announced it was halting 787 Dreamliner deliveries once again. The Federal Aviation Administration said the company had identified a problem with a fuselage component requiring additional analysis before production could resume. Boeing stock fell 3 percent in extended trading, signaling a test of its 50-day moving average. This was the second major halt for the aircraft program—the company had only resumed deliveries in late 2022 after a production freeze lasting more than a year.

Earnings reports from six major companies arrived late Thursday, with mixed results. MercadoLibre crushed expectations on both earnings and revenue, sending its stock up 6 percent after hours. Booking Holdings beat earnings estimates but saw shares remain essentially flat in extended trading, having undercut its 21-day line during the regular session. Autodesk reported earnings that slightly topped views but guided lower, causing the stock to decline 3 percent overnight. Intuit beat Q2 expectations comfortably but only reiterated its existing fiscal 2023 guidance, leaving shares tilted higher but cautious. Floor & Decor topped earnings while missing slightly on revenue, with stock rising 5 percent after hours. Block, the parent company of Square, missed on earnings but beat on revenue, jumping 9 percent in extended trade. The mixed bag reflected the fragility of the current market environment—even solid results could not guarantee sustained momentum.

All of this unfolds against the backdrop of Friday's personal consumption expenditures inflation report, the Federal Reserve's preferred gauge of price pressures in the economy. The Commerce Department will release the January PCE price index at 8:30 a.m. Eastern time. Economists expect the headline PCE to show a 0.4 percent monthly gain, with the core measure—excluding food and energy—also rising 0.4 percent. Year-over-year, the headline PCE inflation rate is expected to dip to 4.9 percent from December's 5 percent, while core PCE is seen nudging down to 4.3 percent from 4.4 percent. Investors and Fed officials will be watching closely for movement in nonenergy services prices excluding housing, a measure that Federal Reserve Chair Jerome Powell has emphasized as particularly important to understanding underlying inflation dynamics. Personal income is expected to rise 1 percent, with consumer spending climbing 1.2 percent.

The stakes for Friday's report are substantial. A tame inflation reading could provide a positive catalyst for equities, potentially validating the market's recent optimism about the Fed's ability to engineer a soft landing. But a hotter-than-expected number could send the 10-year Treasury yield surging toward 4 percent, a move that would likely damage the fragile rally that has been building since early in the year. The 10-year yield fell 4 basis points Thursday to close at 3.88 percent, and crude oil futures rose nearly 2 percent to $75.39 a barrel, ending a six-day losing streak. Natural gas popped 6.4 percent for a second consecutive solid gain. Copper futures, by contrast, tumbled 3.1 percent.

The broader technical picture remains constrained. The Nasdaq composite approached its 21-day moving average near Thursday's open, retreated to just above its 200-day line at midday, then reversed again to near morning highs. The S&P 500 fell below its 50-day moving line for much of the day before pushing higher again. The Russell 2000 also hit resistance at its 21-day moving average. The major indexes are holding support but quickly encountering resistance on any attempt to move higher—a pattern that suggests the market is still searching for direction. Among growth-focused ETFs, the Innovator IBD 50 ETF rose 1.1 percent, the iShares Expanded Tech-Software Sector ETF advanced 0.9 percent, and the VanEck Vectors Semiconductor ETF jumped 3.5 percent. The more speculative ARK Innovation ETF retreated 1.5 percent, and the ARK Genomics ETF sank 1.35 percent.

For investors, the message from Thursday's action is caution. The market opened with promise but quickly revealed its limitations. Stocks that looked actionable in the first minutes of trading fell back, with few exceptions. The advice from market analysts is to wait for the major indexes and leading stocks to demonstrate real strength—specifically, the Nasdaq decisively reclaiming its 21-day moving average alongside the S&P 500 and Russell 2000. Even then, exposure should be brought back gradually, not rushed. In the meantime, watchlists should be updated and portfolios reviewed for potential adjustments. If the market deteriorates further, a more defensive posture may be warranted. Friday's inflation report will likely determine whether the market can break through its current resistance or whether it retreats further into consolidation.