Can the market maintain a rally into year end?
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Illustration: Sarah Grillo/Axios
The 2025 market rally has been largely powered by a small set of tech stocks.
The big picture: Investors have to decide whether the blockbuster earnings Nvidia reported on Wednesday are enough to calm the AI bubble fears that have weighed on the market. No pressure.
What they're saying: "I think Nvidia had a good quarter, I don't know if it's enough to save the whole AI trade," Jay Goldberg of Seaport told Axios.
- With the lone sell rating on Nvidia, he admits this quarter was good, but not enough to change his mind on the stock and his broader concern that all the AI spending that Nvidia is benefiting from can't go on forever.
- The broader market is up 1% premarket as Nvidia popped 7% after hours.
Zoom out: A lot was riding on Nvidia into the print, given the stock was down over 9% amid a broader tech selloff.
- "It's been an ugly market the past couple days" and it feels like clients are "shutting down for the rest of the year," Rishi Jaluria, research analyst at RBC Capital Markets, told Axios.
Between the lines: Clients are afraid to get out of the major tech names that have defined the market rally this year.
- "Conversations with clients suggest sentiment remains bearish. However, FOMO has kept them from deploying hedges," Amy Wu Silverman, head of derivatives strategy at RBC Capital Markets, wrote in a note.
- "One client said, 'Yes, we are all a bunch of fully invested bears.'"
By the numbers: Nvidia results don't just affect the tech trade.
- With Nvidia making up 8% of the S&P 500 by market cap, its movements sway the broader market. The stock alone is responsible for about a fifth of overall market gains for the year.
State of play: This is not only about Wall Street anymore, with retail making up about a quarter of trading volume.
- Nvidia earnings "will help determine momentum going forward and the marching orders of the "retail" army," Silverman wrote.
- A buy-the-dip mentality has worked out for retail investors this year. Because of that, inflows from the group have about doubled amid the latest selloff, said Steve Sosnick, chief strategist at Interactive Brokers.
Threat level: As much as it all comes down to Nvidia, this is also about:
💰 The Fed — which may pause its rate-cutting cycle in December based on its latest meeting minutes, per a note from RSM US principal and chief economist Joe Brusuelas.
🏦 Leverage — as more of the largest tech companies take on debt to finance their AI investments rather than only using the cash they generate.
📈 Valuations — which are inching closer to bubble territory, with the S&P 500 trading at 30 times earnings versus the historic average of 18.
🤔 Uncertainty — on the health of the economy as well as tariff policy.
What to watch: The reaction to Nvidia earnings, of course, but also how those results affect the broader market in the coming days and weeks.
- "With only seven trading days left in November, time is running out to move the markets back up," Bob Lang, chief options analyst and founder of Explosive Options, wrote in a note.
