Nvidia Tops Consensus, Investors Await Jobs Data

0:05Welcome to the Schwab Market Update Podcast, where we prepare you for each trading day with a recap of recent news and a look at what's ahead. I'm Keith Lansford, and here is Schwab's early look at the markets for Thursday, November 20th. A solid earnings performance from NVIDIA lifted shares of the AI giant initially after the market closed yesterday, possibly easing mounting concerns over AI demand and valuations. The largest U.S. company by market capitalization reported earnings per share of$1.30, slightly ahead of the average$1.25 forecast on revenue of$57.01 billion versus the consensus of$54.9 billion.

0:53Revenue rose 62 % year-over-year. In the important guidance arena, NVIDIA easily exceeded analysts' expectations with a forecast for fiscal fourth quarter revenues between$63.7 billion and$66.3 billion. FactSec consensus was$62.17 billion. It's really tough to impress Wall Street when the world has a spotlight on you and everyone expects you to beat and raise. But once again, NVIDIA has delivered, said Nathan Peterson, director of derivatives research and strategy at the Schwab Center for Financial Research. Those looking for signs of demand deceleration for NVIDIA's chips will have to continue to wait.

1:35NVIDIA, by virtue of its immense market capitalization, typically sees investors looking for cracks in its armor. Earlier this year, falling margins were a negative focus point. the gross margin in the fiscal third quarter rose to 73.6 percent from 72.7 percent in the second quarter. While down from a year ago, it's still a very strong showing. At a recent conference, NVIDIA said it has$500 billion in orders on the books for its Blackwell and Rubin graphics processing units through 2026. If those numbers start translating into the company's forward revenue guidance, it could mean that analysts' previous revenue outlooks for next next year start looking light, giving NVIDIA a chance to continue to beat forecasts.

2:19Blackwell sales are off the charts and cloud GPUs are sold out, said Jensen Huang, founder and CEO of NVIDIA in the company's press release. Compute demand keeps accelerating and compounding across training and inference, each growing exponentially.

2:39Looking beyond NVIDIA, today's September non-farm payrolls report due at 8.30 a.m. Eastern Time is the first for investors in more than two months due to the government shutdown and could reinforce or push back on ideas that the labor market is slowing. Analysts expect anemic growth of around 50 ,000, though any major deviation could cause a bond market reaction. Whatever the case, it's possible investors could dismiss the report since the data are so old and came before layoffs appeared to increase sharply in October and November. Today's report won't include the jobless rate, according to the White House, because that's compiled in the separate household employment report that's not being released.

3:23Recent government data suggests unemployment grew in October from the August level of 4.3%, Reuters reported. The number of Americans receiving jobless benefits climbed sharply between mid-September and mid-October. Fed minutes from the last meeting released late Wednesday appeared to show a slight majority leaning toward a pause in rate cuts this coming month, though the meeting took place several weeks ago and may not reflect policymakers' current viewpoints. Those arguing to keep rates at the current level between 3.75 percent and 4 percent argued that by lowering rates too much amid stubborn inflation, the Fed risks sending the wrong signal to markets.

4:04After the minutes, odds of a rate cut in December sank to their lowest level yet, below 34 percent, according to the CME FedWatch tool. It was above 90 percent a month ago. Long-term yields should stay near 4 percent unless the economy begins to slow, said Colin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research. Inflation and budget concerns should prevent yields from falling much further, even if the Fed cuts rates a few times over the next few quarters. In the last 15 years, only five Fed meetings featured three dissents. This has the potential to be the sixth.

4:44The Fed may have to meet in mid-December with little official information on the state of the job market, as the Bureau of Labor Statistics, or BLS, won't publish an October employment situation news release. The household survey, which includes the unemployment rate, can't be collected retroactively, so that data point won't ever be available for October. The BLS said it will expand the collection period both ways for its November employment data, which will add processing time. That means the November data won't be out until December 16th, after the Fed's December 9th and 10th meeting. And there won't be a September job openings or labor turnover survey or jolts either.

5:26In other data updates, the government plans to release its September Producer Price Index, or PPI, next Tuesday. It already released the September Consumer Price Index, or CPI, last month, and total CPI rose 0.3 % from August, with core CPI, not including food and energy, up 0.2%. Those numbers looked relatively benign, but the Fed likely wants to get personal consumption expenditures or PCE data to have a handle on the price situation. It's unclear when October PCE numbers will surface, though they were originally scheduled for next week. Next week was also supposed to include an update on second quarter gross domestic product or GDP, another question mark.

6:10For the current quarter, the Atlanta Fed's GDP Now tool projects 4.2 % growth, a figure updated Wednesday and compared to the previous estimate of 4.1%. Volatility in the dollar climbed Wednesday, and Bitcoin slipped another 3.6%, back below$90 ,000 before NVIDIA's earnings, suggesting the market remains in risk-off mode despite a slight rebound in major indexes. The S &P 500 index was down four straight sessions, entering Wednesday, the longest slide since August, and off about 4 % from all-time highs, as investors increasingly question the return on investment proposition for AI and the big companies spending billions on it.

6:55November is shaping up to be the first month in the red for stocks since April, when tariff fears gripped the market. Two big retailers reporting this week, Home Depot and Target disappointed with their results, and Target cited caution among its customers. Walmart shares results this morning, with the impact of tariffs and consumer sentiment both in focus. Earnings yesterday for Lowe's cheered investors, as earnings per share easily beat analysts' consensus and revenue met expectations. Guidance was a mixed affair, with the company's 2026 revenue forecast edging above Wall Street's, but earnings per share on the low side of its previous range.

7:36Shares rose 4%. Target slipped despite topping Wall Street's consensus on earnings per share and reporting revenues that met consensus. It also reaffirmed sales guidance for the current holiday quarter, but cut the top end of its full-year earnings guidance and suffered a 2.7 % comparable sales drop in the third quarter. For Walmart, investors expect earnings per share of 60 cents, up 3.6 % from a year ago, on revenue of$177.4 billion, up 4.6%. That's below the company's annualized five-year growth rate of 5.4%. Major indexes rebounded Wednesday as investors prepared for NVIDIA's results, led by NVIDIA's nearly 3 % rally.

8:23AI-related stocks, including Broadcom, Oracle, and Intel, shared in the rebound, and semiconductors as a sector rose about 1.8%. In sector action, Infotech was the clear leader yesterday, with a nearly 1 % rise, while six of 11 S &P sectors finished green. Energy brought up the rear, dropping 1%, as U.S. crude futures fell back under$60 per barrel on mixed supply data and talk of a push to end the war in Ukraine. The October S &P 500 low of 6 ,552 might be a level to watch on further pullbacks. That's close to the 100-day moving average of 6 ,540. Though the S &P 500 and other major indexes this week slipped under their 50-day moving averages, which for many months had formed support, it would likely take longer below that to change the upward trend on charts.

9:19The drop below those averages came after several rebounds on earlier tests, suggesting that tests of the 100-day could signal eventual drops below it. Checking individual stocks, Constellation Energy jumped 5 % Wednesday after the company confirmed that its Crane Clean Energy Center is now backed by a$1 billion U.S. Department of Energy loan, Briefing.com reported. This loan will help finance investment in nuclear energy at Three Mile Island in Pennsylvania. Shares of tech company Block rose almost 7 % Wednesday after releasing a long-term financial outlook that forecast mid-teens profit growth through 2028 and 30 % adjusted annual operating income growth.

10:05The company also increased its share buyback program. Palo Alto Networks fell 5 % after the cybersecurity firm reported a smaller earnings per share beat and in-line revenue. Everything else in the report, including guidance, appeared to be in-line with analysts' consensus. Fiscal first quarter revenue grew 16 % year-over-year. Shares are down about 10 % from recent highs. And Walmart fell almost 1 % Wednesday ahead of today's earnings report. Shares are roughly flat this month and down about 10 % from their October peak. Last time out, Walmart raised guidance but reported tariff-related headwinds that forced it to raise prices on some items.

10:50The Dow Jones Industrial Average climbed 47.03 points Wednesday, or 0.10%, to 46 ,138.77. The S &P 500 index added 24.84 points or 0.38 % to 6 ,642.16. And the NASDAQ composite climbed 131.38 points or 0.59 % to 22 ,564.23. This has been the Schwab Market Update podcast. To stay informed, visit www.schwab.com slash market update or follow us for free in your favorite podcasting app. And if you like what you've heard, please consider leaving us a rating or a review. It really helps new listeners find the show. Join us for another update tomorrow.

11:48For important disclosures, see the show notes and schwab.com slash market update podcast.