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Nvidia Earnings Could Make or Break the Market as Consumer Data Shows Weakness

MarketDash Editorial Team
20 days ago
All eyes turn to Nvidia's after-market earnings report tomorrow as AI concerns weigh on stocks. Meanwhile, Home Depot's disappointing results signal consumer weakness, and rising tensions between China and Japan add another layer of uncertainty for investors.

Nvidia Takes Center Stage

If you're wondering what's going to happen with the stock market this week, the answer is simple: wait for Nvidia Corp. (NVDA) to report earnings tomorrow after the close. Everything else is just noise.

The chip giant's stock has given up recent gains and is now sitting at the top of its first support zone. RSI indicators show it's not yet oversold, but the pressure is building. Here's why this earnings report matters so much to the broader market.

The current selloff in tech stocks centers around several AI-related concerns that have investors nervous. First, there's the question of overbuilding in AI data centers. Second, the debt financing being used to fund this buildout is raising eyebrows. Third, there are questions about circular financing involving Nvidia itself. And finally, chip depreciation issues are coming into focus.

If Nvidia's earnings can ease these concerns, expect a sharp rally across the market. The company has been the poster child for the AI revolution, and good news from management could remind everyone why they got excited in the first place. On the other hand, if the earnings report or guidance heightens any of these concerns, brace for a significant drop.

This brings us to two important principles worth remembering. First, nobody knows with certainty what's going to happen next in the markets. Second, making decisions based on probabilities rather than predictions is the only realistic and profitable approach. We're dealing with scenarios and risk management here, not crystal balls.

Consumer Weakness Shows Up in Home Depot Numbers

While everyone waits for Nvidia, Home Depot Inc. (HD) delivered some concerning news about the consumer today. The home improvement retailer's numbers suggest shoppers are pulling back.

Here are the details that matter. For fiscal 2026, Home Depot expects earnings per share to drop 5% year-over-year to $14.48, missing the consensus estimate of $14.98. Third quarter earnings came in at $3.74 per share versus the $3.84 consensus. Revenue hit $41.35 billion, slightly ahead of the $41.15 billion estimate, but that's not the whole story.

The real concern shows up in the transaction data. Customer transactions decreased 1.4%, meaning fewer people are walking through the doors. Yes, those who did shop spent more, with the average receipt climbing to $90.39 from $88.65 a year earlier. But having fewer customers spending slightly more isn't exactly a sign of robust consumer health. Fiscal 2025 sales growth came in at 3%, up from 2.8% previously, but that modest improvement doesn't offset the broader weakness signals.

We'll get more data on the consumer soon. Lowe's Companies Inc. (LOW) and Target Corp. (TGT) report earnings in the premarket tomorrow, and Walmart Inc. (WMT) follows on Thursday morning. These reports will either confirm Home Depot's weakness or show it's more company-specific.

Labor Market Softness and Private Credit Concerns

The labor market is showing some cracks too. Initial jobless claims for the week ending October 18 came in at 232,000 versus 219,000 the prior week. That's not catastrophic, but it's moving in the wrong direction. More concerning is the ADP data for the four weeks ending November 1, which shows job losses averaging 2,500 per week.

There's also heightened concern about private credit markets after Blue Owl Capital Inc. (OWL) made a restrictive move. This matters because Blue Owl has been financing AI data centers, connecting back to those Nvidia-related concerns we discussed earlier. When the lenders start tightening up, it's usually a sign they're seeing something they don't like.

China and Japan Tensions Heat Up

Here's something that isn't getting enough attention: China is sending ships to disputed islands claimed by Japan and warning its citizens against traveling there. This kind of geopolitical flare-up can drag markets significantly lower if it escalates. It's the sort of thing that seems like background noise until suddenly it isn't. Prudent investors should keep this on their radar.

Magnificent Seven Money Flows Tell a Story

Most portfolios these days are heavily concentrated in the Magnificent Seven tech stocks, which makes daily money flows in these names particularly important. In early trading today, the picture is mostly negative.

Only Apple Inc. (AAPL) and Alphabet Inc. Class C (GOOG) are showing positive money flows. Meanwhile, Amazon.com Inc. (AMZN), Meta Platforms Inc. (META), Nvidia (NVDA), Microsoft Corp. (MSFT), and Tesla Inc. (TSLA) are all seeing money flow out.

The broader market ETFs reflect this weakness. Both SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust Series 1 (QQQ) are showing negative money flows in early trading.

What Smart Money Is Doing

Beyond just watching the major indices, investors can gain an edge by tracking where smart money is moving across different asset classes. For those tracking precious metals, the most popular gold ETF is SPDR Gold Trust (GLD), while the go-to silver play is iShares Silver Trust (SLV). For oil exposure, United States Oil ETF (USO) remains the most widely followed.

Bitcoin continues to see selling pressure as well, adding to the risk-off tone across markets.

Portfolio Strategy for Uncertain Times

So what should investors do right now? The prudent approach is to continue holding good, very long-term existing positions while maintaining appropriate protection through cash, Treasury bills, or short-term tactical trades combined with hedges.

Your protection band should reflect your individual situation. If you're older or more conservative, err on the high side of protection. If you're younger or more aggressive, you can operate with less protection. The key is having enough dry powder to take advantage of opportunities when they arise. You can't buy the dip if you're fully invested.

Think of protection bands on a scale from 0% to 100%. Zero percent would mean you're fully invested with no cash and no hedges, essentially very bullish. A 100% protection band would indicate maximum defensive positioning with aggressive cash levels and hedges or even short positions. Most investors should be somewhere in between, adjusted for their personal risk tolerance.

When adjusting hedge levels, consider using wider stops on stock positions to avoid getting shaken out by normal volatility. This is especially important for high beta stocks that naturally move more than the market. And remember, if you're not holding cash, you can't take advantage of the opportunities that will inevitably present themselves.

Thoughts on Bond Allocation

For those following a traditional 60/40 stock-bond allocation, the current environment doesn't particularly favor long duration strategic bond positions when you adjust for inflation and probability-based risk reward.

If you want to maintain that traditional 60% stocks and 40% bonds split, focus on high quality bonds with durations of five years or less. More sophisticated investors might consider using bond ETFs as tactical positions rather than buy-and-hold strategic allocations at this time. The bond market is navigating its own challenges, and flexibility matters.

The Big Picture

This article isn't about any single stock, even though we've used Nvidia as the focal point. It's about understanding how different pieces fit together to create the current market environment. We've got AI concerns, consumer weakness, labor market softness, private credit tightening, and geopolitical tensions all happening at once.

Nvidia's earnings tomorrow will either calm fears or amplify them. The consumer spending data coming from Lowe's, Target, and Walmart will tell us whether Home Depot's weakness is isolated or part of a broader trend. And those China-Japan tensions could escalate or fade into the background.

The market is at an inflection point, and the next few days of earnings reports and economic data will determine which direction it breaks. Stay flexible, maintain appropriate protection, and remember that nobody has a crystal ball. What we can do is assess probabilities, manage risk, and position ourselves to handle whatever comes next.

Back to News

Nvidia Earnings Could Make or Break the Market as Consumer Data Shows Weakness

MarketDash Editorial Team
20 days ago
All eyes turn to Nvidia's after-market earnings report tomorrow as AI concerns weigh on stocks. Meanwhile, Home Depot's disappointing results signal consumer weakness, and rising tensions between China and Japan add another layer of uncertainty for investors.

Nvidia Takes Center Stage

If you're wondering what's going to happen with the stock market this week, the answer is simple: wait for Nvidia Corp. (NVDA) to report earnings tomorrow after the close. Everything else is just noise.

The chip giant's stock has given up recent gains and is now sitting at the top of its first support zone. RSI indicators show it's not yet oversold, but the pressure is building. Here's why this earnings report matters so much to the broader market.

The current selloff in tech stocks centers around several AI-related concerns that have investors nervous. First, there's the question of overbuilding in AI data centers. Second, the debt financing being used to fund this buildout is raising eyebrows. Third, there are questions about circular financing involving Nvidia itself. And finally, chip depreciation issues are coming into focus.

If Nvidia's earnings can ease these concerns, expect a sharp rally across the market. The company has been the poster child for the AI revolution, and good news from management could remind everyone why they got excited in the first place. On the other hand, if the earnings report or guidance heightens any of these concerns, brace for a significant drop.

This brings us to two important principles worth remembering. First, nobody knows with certainty what's going to happen next in the markets. Second, making decisions based on probabilities rather than predictions is the only realistic and profitable approach. We're dealing with scenarios and risk management here, not crystal balls.

Consumer Weakness Shows Up in Home Depot Numbers

While everyone waits for Nvidia, Home Depot Inc. (HD) delivered some concerning news about the consumer today. The home improvement retailer's numbers suggest shoppers are pulling back.

Here are the details that matter. For fiscal 2026, Home Depot expects earnings per share to drop 5% year-over-year to $14.48, missing the consensus estimate of $14.98. Third quarter earnings came in at $3.74 per share versus the $3.84 consensus. Revenue hit $41.35 billion, slightly ahead of the $41.15 billion estimate, but that's not the whole story.

The real concern shows up in the transaction data. Customer transactions decreased 1.4%, meaning fewer people are walking through the doors. Yes, those who did shop spent more, with the average receipt climbing to $90.39 from $88.65 a year earlier. But having fewer customers spending slightly more isn't exactly a sign of robust consumer health. Fiscal 2025 sales growth came in at 3%, up from 2.8% previously, but that modest improvement doesn't offset the broader weakness signals.

We'll get more data on the consumer soon. Lowe's Companies Inc. (LOW) and Target Corp. (TGT) report earnings in the premarket tomorrow, and Walmart Inc. (WMT) follows on Thursday morning. These reports will either confirm Home Depot's weakness or show it's more company-specific.

Labor Market Softness and Private Credit Concerns

The labor market is showing some cracks too. Initial jobless claims for the week ending October 18 came in at 232,000 versus 219,000 the prior week. That's not catastrophic, but it's moving in the wrong direction. More concerning is the ADP data for the four weeks ending November 1, which shows job losses averaging 2,500 per week.

There's also heightened concern about private credit markets after Blue Owl Capital Inc. (OWL) made a restrictive move. This matters because Blue Owl has been financing AI data centers, connecting back to those Nvidia-related concerns we discussed earlier. When the lenders start tightening up, it's usually a sign they're seeing something they don't like.

China and Japan Tensions Heat Up

Here's something that isn't getting enough attention: China is sending ships to disputed islands claimed by Japan and warning its citizens against traveling there. This kind of geopolitical flare-up can drag markets significantly lower if it escalates. It's the sort of thing that seems like background noise until suddenly it isn't. Prudent investors should keep this on their radar.

Magnificent Seven Money Flows Tell a Story

Most portfolios these days are heavily concentrated in the Magnificent Seven tech stocks, which makes daily money flows in these names particularly important. In early trading today, the picture is mostly negative.

Only Apple Inc. (AAPL) and Alphabet Inc. Class C (GOOG) are showing positive money flows. Meanwhile, Amazon.com Inc. (AMZN), Meta Platforms Inc. (META), Nvidia (NVDA), Microsoft Corp. (MSFT), and Tesla Inc. (TSLA) are all seeing money flow out.

The broader market ETFs reflect this weakness. Both SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust Series 1 (QQQ) are showing negative money flows in early trading.

What Smart Money Is Doing

Beyond just watching the major indices, investors can gain an edge by tracking where smart money is moving across different asset classes. For those tracking precious metals, the most popular gold ETF is SPDR Gold Trust (GLD), while the go-to silver play is iShares Silver Trust (SLV). For oil exposure, United States Oil ETF (USO) remains the most widely followed.

Bitcoin continues to see selling pressure as well, adding to the risk-off tone across markets.

Portfolio Strategy for Uncertain Times

So what should investors do right now? The prudent approach is to continue holding good, very long-term existing positions while maintaining appropriate protection through cash, Treasury bills, or short-term tactical trades combined with hedges.

Your protection band should reflect your individual situation. If you're older or more conservative, err on the high side of protection. If you're younger or more aggressive, you can operate with less protection. The key is having enough dry powder to take advantage of opportunities when they arise. You can't buy the dip if you're fully invested.

Think of protection bands on a scale from 0% to 100%. Zero percent would mean you're fully invested with no cash and no hedges, essentially very bullish. A 100% protection band would indicate maximum defensive positioning with aggressive cash levels and hedges or even short positions. Most investors should be somewhere in between, adjusted for their personal risk tolerance.

When adjusting hedge levels, consider using wider stops on stock positions to avoid getting shaken out by normal volatility. This is especially important for high beta stocks that naturally move more than the market. And remember, if you're not holding cash, you can't take advantage of the opportunities that will inevitably present themselves.

Thoughts on Bond Allocation

For those following a traditional 60/40 stock-bond allocation, the current environment doesn't particularly favor long duration strategic bond positions when you adjust for inflation and probability-based risk reward.

If you want to maintain that traditional 60% stocks and 40% bonds split, focus on high quality bonds with durations of five years or less. More sophisticated investors might consider using bond ETFs as tactical positions rather than buy-and-hold strategic allocations at this time. The bond market is navigating its own challenges, and flexibility matters.

The Big Picture

This article isn't about any single stock, even though we've used Nvidia as the focal point. It's about understanding how different pieces fit together to create the current market environment. We've got AI concerns, consumer weakness, labor market softness, private credit tightening, and geopolitical tensions all happening at once.

Nvidia's earnings tomorrow will either calm fears or amplify them. The consumer spending data coming from Lowe's, Target, and Walmart will tell us whether Home Depot's weakness is isolated or part of a broader trend. And those China-Japan tensions could escalate or fade into the background.

The market is at an inflection point, and the next few days of earnings reports and economic data will determine which direction it breaks. Stay flexible, maintain appropriate protection, and remember that nobody has a crystal ball. What we can do is assess probabilities, manage risk, and position ourselves to handle whatever comes next.