- Nvidia stock closed up 6.5% on Thursday.
- NVDA shares are positive again Friday on PPI hopes.
- Higher US unemployment is helping Fed pivot narrative.
- Broadcom earnings beat has helped semiconductor industry.
Nvidia (NVDA) stock is rising in Friday's premarket a day after it closed up a hefty 6.5% on more news that the Federal Reserve's interest rate hiking is beginning to deliver results. NVDA shares closed at $171.69 on Thursday after the US Labor Department reported that continuing jobless claims for the week ending November 25 rose by 62,000 to 1.67 million. Additionally, initial jobless claims for the week ending December 2 rose 4,000 to 230,000, which was in line with consensus.
How can more unemployment be good for Nvidia stock? The US labor market has been robust for all of 2022 despite the Federal Reserve raising interest rates. Now that unemployment is rising, much of the market has taken the view that inflation will continue to drop. Since high inflation spurred higher interest rates to begin with, a softening of inflation should mean the central bank can begin cutting rates sooner than thought.
Nvidia stock news
Traders, investors, shareholders, you name it, are now beginning to believe in the "soft landing" narrative in which Fed Chair Jerome Powell can lift his foot off the pedal and switch to talking about a pivot. Growth stocks like Nvidia would benefit from lower rates, both in terms of their debt payments and in terms of their market cap valuations. This is because lower interest rates engender a smaller discount rate on futures earnings.
Now NVDA stock has risen another 0.3% in Friday's premarket, exactly in line with the NASDAQ futures, because the market expects this narrative to be reinforced with today's Producer Price Index (PPI). The data from November will be release by the United States Bureau of Labor Statistics at 8:30am EST. Consensus says the YoY PPI figure will rise 7.4% rather than October's 8% figure. If the data is in line or even below 7.4%, then expect the market to soar, especially NASDAQ-listed stocks like Nvidia.
Nvidia stock is primarily waxing and waning based on the perceived state of inflation. Though many commenters and investment banks view a recession as likely for 2023, the equity market is primarily still focused on this Fed inflation story. Nvidia has largely been out of the news over the past month since it released Q3 earnings. On Tuesday, however, CEO Jensen Huang joined Apple (AAPL) CEO Tim Cook and CEO Sanjay Mehrotra from Micron Technology (MU) at an Arizona groundbreaking ceremony for Taiwan Semiconductor's (TSM) new plant to be built in Arizona. Nvidia stands to be a major client of the new plant as Taiwan Semiconductor has recently raised its projected investment in the state from $12 billion to $40 billion.
Elsewhere in semiconductor land, Broadcom (AVGO) reported a fiscal Q4 earnings beat on Thursday that helped semiconductor stocks all around. Broadcom beat both earnings and revenue consensus and was able to raise guidance for the current quarter. Separately, Broadcom's attempted $61 billion acquisition of VMware was reported on Thursday to be entering a long-term antirust review with the European Comission. The review is expected to begin in late December and last through May 2023.
Nvidia stock forecast
Nvidia stock's daily chart has now featured three new highs in close proximity if Friday's premarket price above $173 is reiterated in the regular session. The first came on November 15, then again on December 1 and now possibly on Friday, December 9. With high lows also prominently being featured during this period, it seems like plenty of accumulation is happening.
The obvious target for bulls should be the supply zone between $190 and $192. This is where rallies were foreclosed on twice in August and once in June. On the downside, in the case of worse inflation data in Friday's PPI or if Powell spews hawkish vitriol next week, then expect NVDA stock to pierce through the 20-day moving average that is currently above $162. Further support sits at the 50-day moving average, which is now around $141.50. Then the large demand zone between $110 and $125 remains ready in case the market's optimistic stance switches abruptly.
NVDA 1-day chart
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