NVIDIA's highly anticipated earnings were released after the market closed on Wednesday. Traders are anticipating that the S&P 500 may finally break out of its nearly six-month consolidation around the 6900 level and make a run for the 7000 point mark.
NVIDIA reported blockbuster results and provided an optimistic outlook for the coming quarter. The company's fiscal 2026 fourth-quarter revenue reached a record $68.13 billion, a 73% year-over-year increase, comfortably surpassing market expectations. The gross margin improved to 75%, and net profit nearly doubled compared to the same period last year. A significant 91% of NVIDIA's revenue stemmed from its data center segment, with over half of that segment's income originating from hyper-scale cloud service providers. Combined capital expenditures from tech giants Google, Amazon, Meta, and Microsoft are projected to reach $630 billion this year, a substantial portion of which is expected to translate into revenue for NVIDIA.
Investors were further encouraged by an earnings guidance that also exceeded forecasts. The company anticipates current-quarter revenue of approximately $78 billion (plus or minus 2%), significantly higher than the analyst consensus of $72.6 billion. Notably, this guidance excludes the Chinese market, suggesting that potential future approvals for exports of chips like the H200 to China could provide an additional positive surprise to subsequent quarters' performance.
The earnings call did not mention the latest round of investment discussions with OpenAI, which is speculated to be worth around $300 billion. This potential new agreement could replace the framework deal established last year and, if finalized, might serve as another catalyst for the stock price. Although NVIDIA's stock gave up its after-hours gains and turned negative, its year-to-date performance still outpaces other major tech companies and the S&P 500 index.
The robust earnings and guidance may temporarily ease investor concerns about an AI bubble. However, the disruptive impact of AI on related sectors, particularly the software industry, will likely require more time to be fully absorbed. If the technology sector, which carries a weighting of over 30% in the S&P 500, fails to regain strong momentum, the broader index will struggle to find upward traction and may lag behind the gains seen in Asian and European markets.
Can the S&P 500 Challenge 7000? After being resisted for over a week below its 50-day moving average, S&P 500 index futures broke through and closed above this key level on Wednesday. This price action has formed a coiled pattern, suggesting a potential bullish breakout and a renewed focus on retesting all-time highs.
With trading volume continuing to diminish, it underscores the importance of allowing the market move to develop organically rather than attempting to front-run it. For investors with less patience, a bounce from the 50-day moving average might offer an alternative long entry point. In either scenario, stop-loss orders should be placed below the entry level to guard against a price reversal.
A decisive break above the descending trendline resistance would shift market focus back towards the record highs, with a clear break above 7000 being critical. Previously, futures have tested above this area multiple times but closed well off their intraday peaks, highlighting persistent hesitation. A close above these highs, preferably accompanied by expanding volume and a firm breakout, would bolster confidence in the resumption of the broader uptrend. In such a case, the 7043 level would become a logical target or area for reassessment.
If the price falls back below the 50-day moving average, it would cast doubt on the near-term bullish bias, bringing the ascending trendline from February back into focus. A decisive break below this trendline would increase the risk of further declines, especially if the 6752 level is breached. A break below 6752 could see the 200-day moving average and the 6542 level tested as subsequent support.
Given that NVIDIA's stock failed to hold its initial after-hours gains, its performance during the regular North American trading session, with increased volume, will likely be pivotal in determining whether the index's breakout attempt succeeds or falters. Initially, a 2% surge in NVIDIA's after-hours price appeared to positively influence broader US market sentiment.
Yen Remains in Focus Overnight Despite the Japanese Prime Minister expressing caution regarding interest rate hikes, the Bank of Japan Governor reiterated the path toward policy normalization on Tuesday, stating that economic data from the March and April meetings would be assessed to determine the timing of a rate increase. The prevailing market expectation remains for a hike before June. The renewed climb in Japanese government bond yields across various maturities on Thursday suggests the central bank's actions might be lagging behind market expectations.
The USD/JPY pair's rebound also faces technical challenges. Current charts indicate that resistance from a trendline and overbought conditions may pressure the pair, potentially leading to a short-term consolidation or decline. Initial support is seen in the 155.20/50 zone; a break below this area could see the pair move down towards the lower boundary of its recent range near 153.
Bitcoin Surges 6%, Reclaiming $68,000 Bitcoin rallied 6% overnight, climbing back to the $68,000 level. Chart analysis suggests a potential reversal pattern forming around $64,000. The $70,000-$72,000 range could be the next target for bulls. However, given the early stage of this rebound and significant macroeconomic uncertainties (such as trade tariffs, geopolitical tensions involving Iran, and liquidity conditions), the risk of a pullback after gains remains. Until a decisive break above key resistance occurs, the price may continue to oscillate within a lower range.