Market sentiment turned cautious last Friday, with U.S. stocks closing lower across the board, influenced by the return of geopolitical concerns following the U.S.-China summit, rising Treasury yields, and persistent inflation. Data from the session showed the S&P 500 index fell 1.2% on Friday, eking out a mere 0.1% gain for the week. The tech-heavy Nasdaq Composite dropped 1.5% on Friday, ending the week with a slight 0.1% decline. The Dow Jones Industrial Average closed down 1.1% on Friday, resulting in a 0.2% weekly loss. Notably, the yield on the 10-year U.S. Treasury note breached the 4.5% threshold last week, pressuring risk assets, and this metric will remain a key focus for markets this week. Furthermore, NVIDIA's quarterly earnings report due this week will not only impact its own stock price but also directly influence the trajectory of the AI sector and the broader technology stock landscape.
Following several weeks packed with earnings and economic data releases, the market pace slows this week, offering a brief respite. The primary market focus will be NVIDIA's quarterly earnings report scheduled for release on Wednesday. The chip giant's market capitalization successfully surpassed $5.7 trillion last week, solidifying its position as the world's most valuable company. Previously, NVIDIA's CEO Jensen Huang accompanied senior U.S. officials on a visit to China, and remarks regarding cooperation plans in China during this earnings call will be closely watched.
Other notable earnings reports to watch include retail giant Target on Wednesday and Walmart on Thursday. Budget airline Ryanair reports on Monday, and leading government defense contractor Booz Allen Hamilton will release its results on Friday. Additionally, the University of Michigan's reports on consumer sentiment and inflation expectations, due Friday, will be a highlight of the week's economic calendar. Investors will also receive data on service-sector economic activity from the New York Fed on Monday and the Kansas City Fed on Friday.
This week's major event is undoubtedly NVIDIA's first-quarter earnings report after the market closes on Wednesday. NVIDIA's performance has long been a bellwether not just for the semiconductor industry but also a key indicator for the AI sector and large-cap tech stocks. However, despite NVIDIA's market cap exceeding $5.7 trillion, UBS analyst Tim Arcuri noted that investors have been cautious in recent months, and only an absolutely stellar report could fully boost market confidence. Arcuri stated, "NVIDIA has always been in the spotlight for capital, but even long-term institutional holders have shown waning enthusiasm. In this context, if the company delivers strong results coupled with positive news on capital returns, the stock could see a rally."
The market will also closely monitor the outcomes of Jensen Huang's recent visit to China. Previous reports indicated that U.S. authorities had approved industry giants like Alibaba, Tencent, and ByteDance to purchase NVIDIA's H200 series chips, a development that previously pushed NVIDIA's stock to record highs. Furthermore, Bank of America analyst Vivek Arya mentioned that investors will pay close attention to NVIDIA's comments regarding competitors in chip design, including established players like AMD and Broadcom, as well as the newly public company Cerebras Systems, which listed last Thursday. According to data compiled by Capital IQ, analysts expect NVIDIA's adjusted first-quarter earnings per share to be $1.78, with revenue of $79.2 billion.
The much-discussed "K-shaped economy" pattern continues to be evident. This term describes a phenomenon where different segments of a population move in opposite directions. This divergence is now particularly pronounced in energy and travel consumption. Bank of America economists analyzed that rising energy prices have a more significant impact on low-income households, as essential expenses like electricity and gasoline constitute a larger share of their total income. Consequently, low-income groups have significantly cut back on energy consumption, with growth in gasoline spending remaining low. In contrast, high-income individuals have hardly reduced their daily energy usage.
Bank of America economists also pointed out that, influenced by turmoil in the Middle East, which has driven up gasoline and jet fuel prices, U.S. travel consumption shows distinct divergence. While conflict in Iran led only about 10% of Americans to cancel travel entirely, high-income Americans are increasing their travel spending at a faster rate than middle- and low-income groups. Although most Americans have not canceled travel due to war-induced price increases, many are choosing to reduce the frequency of trips or cut expenses like accommodations, even as overall spending remains largely stable. Investors will continue to monitor earnings from retail giants like Walmart and airlines to gauge the state of the American consumer.
A new commodity supercycle may be beginning. Carlyle Group energy strategist Jeff Currie predicts the market might be at the dawn of a new commodity supercycle. In a note published last Friday, he argued from multiple angles that the current market is at the starting point of a new long-term bull market for commodities, which he termed "the most asymmetric investment opportunity in modern financial history."
Firstly, Currie stated that the AI industry faces severe resource bottlenecks in energy, metals, and computing power. Meanwhile, the "Magnificent Seven" tech giants are projected to spend over $700 billion on capital expenditures in 2026 alone, further widening the resource gap. Secondly, geopolitical conflicts in the Middle East have triggered a large-scale energy supply crisis. According to Goldman Sachs statistics, global crude oil supply has sharply decreased by over 13.7 million barrels per day. Industry insiders believe that even if tensions ease subsequently, the market structure of the Gulf region—a core supplier of global energy, industrial metals, and fertilizers—has been fundamentally reshaped.
Currie stated, "Capital is flooding into the AI theme but is overlooking the physical assets that power the AI industry—and these assets have quietly become the best-performing asset class of the decade." Currie also noted that the gradual shift towards deglobalization in global trade patterns is altering investment logic: moving from the "HAGO" model (Hard Assets, Global Operations) to a new "HALO" model. Currie redefined "HALO" as "Hard Assets, Local Operations," rather than the typical interpretation of "Heavy Assets, Low Obsolescence."
Currie concluded, "Traditional industries are staging a powerful comeback. Buy the dips, hold your positions, and wait for the takeoff."
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