Mid-Week Wrap: 28th February 2024
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Market Mood
On Tuesday, February 27th, U.S. stocks experienced a modest rally following Nvidia's Q4-23 earnings announcement last week. A sense of eerie calm, though possibly temporary, has settled as markets reflect on the latest earnings season. Trading volumes have notably declined following the robust gains seen last week. Moreover, implied volatility in the S&P 500 options market, indicative of expected trading ranges, has also decreased significantly compared to the heightened activity surrounding Nvidia's earnings.
During the previous week, options markets were anticipating a potential swing of plus or minus $200 billion (approximately a 10-12% price movement) in Nvidia's value upon their earnings release. These expectations proved to be prescient as Nvidia set a new record for the most value added by a company in a single day. This record had only recently been established by Meta following their earnings report on February 1st.