Will Market Continue Narrow Ranges Trading This week? Stock To Watch : Nvidia, AMD, Microsoft

The Dow Jones Industrial Average closed above 40,000 for the first time, gaining 0.3%. The S&P 500 rose 0.1%, while the Nasdaq Composite dipped slightly by 0.1%.

Last Friday’s trading was limited, with major indices moving within narrow ranges. Advancing issues outnumbered declining issues on the NYSE, while the opposite was true for the Nasdaq.

S&P 500 sector performance was mixed. Energy was the standout, closing 1.4% higher. No other sector moved more than 0.9% in either direction.

The consumer discretionary sector saw gains, driven by Tesla rising 1.5% to $177.46 after announcing plans to cut approximately 600 positions in California. Amazon also closed higher, up 0.6% to $184.70.

Treasuries ended with losses, which tempered buying in the stock market. The 10-year note yield rose four basis points to 4.42%, and the 2-year note yield increased three basis points to 4.82%.

Despite last Friday (17 May)'s losses, Treasuries posted solid gains for the week. The 10-year note yield was up eight basis points, while the 2-year note yield was down five basis points for the week.

April Leading Economic Index: -0.6% (consensus: -0.3%; prior: -0.3%)

I believe the attention from investors are turning to Nvidia as it prepares to report its quarterly results this week on 22 May 2024 after market close.

As we can see that the chip giant has been a leader in the AI race, and its performance will serve as a key indicator for the AI sector's momentum. Nvidia's results will be closely watched by investors and analysts alike, considering its significant role in the AI industry.

As of last Friday (17 May) trading, there is no significant movement from Nvidia, but we do see some demand, not enough to move upwards. And we do see that KDJ making a downwards move, and the MACD is flat.

So what does this mean to us? Microsoft has announced plans to offer its cloud computing customers Advanced Micro Devices' (AMD) AI chips .

The aim is to compete with Nvidia's (NVDA, Financial) dominant H100 line of GPUs. Will this make investors confidence and support reducing?

As we know that Nvidia is releasing their earnings this week on Wednesday after market close, and with Microsoft plans to offer its cloud computing customers AMD AI chips through their Azure cloud service.

This will give their customers alternative to Nvidia's high-demand chips. Microsoft will reveal more details at its upcoming Build developer conference.

I think we need to look at how this news would help Microsoft, and it seems like there is not much movement on last Friday (17 May 2024) as Microsoft traded flat sideways.

On the other hand, we do see some upside movement on the AMD part, but there is no significant clear signal of a BUY even though we could see MACD signal quite significant.

I personally would be monitoring AMD before Microsoft conference, as the take up of this AMD AI chips might not increase largely in numbers, but over time, we could see some shift.

Apple (AAPL)

Apple (AAPL) is reportedly developing a slimmer version of its iPhone, expected to be released alongside the iPhone 17 in September 2025.

The new model, internally dubbed D23, will feature a major redesign with a screen size similar to the Pro Max. This move aims to drive demand for iPhones, which saw an 11% decline in Apple's latest quarterly results.

Apple has been trading pretty flat and whether the new model could help to regain back investors confidence remain to be seen. Apple tried to break the $190 level and stay there, but did not succeed.

I would think we need to be patient and watch how Apple navigate the demand for its iPhones especially after its sales drop in latest quarterly results.

From last Friday (17 May) trading, we could see that last week ended on a rather flat and narrow ranges trading. Even though we saw CPI and PPI giving some strong signal, it does not help to push the market to close the week on a higher note.

I would think the S&P 500 sector which have been rather consistent looks like Healthcare, the consumer staples and consumer discretionary are giving mixed signals.

So this week (20 May) I would expect another narrow range trading, as we have Nvidia earnings coming, which might help the S&P 500 and the information technology sector.

Appreciate if you could share your thoughts in the comment section whether you think Nvidia would be able to help push S&P 500 to stay above the 5,300?

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.