Nonfarm Payrolls Take Center Stage
Today’s market action is dominated by the eagerly awaited U.S. nonfarm payrolls report, which investors are scrutinizing for insights on the Federal Reserve’s interest rate strategy. Nvidia remains a focal point, with rising short positions, while meme stock GameStop continues to experience high volatility.
1. Nonfarm Payrolls in the Spotlight
The highlight of the day is the U.S. nonfarm payrolls report, expected to provide vital clues on when the Federal Reserve might begin cutting interest rates. Economists anticipate the addition of 185,000 jobs in May, slightly above April’s 175,000, the smallest gain in six months. The unemployment rate is projected to stay below 4% for the 28th consecutive month.
Despite these expectations, recent economic data has suggested a softening labor market, raising the possibility of a downside surprise. Investors have been concerned that a robust economy might delay rate cuts. However, slowing inflation and a cooling job market have partly alleviated these fears. The Federal Open Market Committee meets next week, but a rate cut is not anticipated. Markets are currently pricing in a 50 basis point reduction by December, with the first cut likely in September.
2. Futures Edge Higher Ahead of Jobs Report
U.S. stock futures traded marginally higher Friday as investors remain cautious ahead of the key jobs report. By 04:00 ET, Dow futures were up 35 points (0.1%), S&P 500 futures climbed 3 points (0.1%), and Nasdaq 100 futures rose 23 points (0.1%). The main indices are on track for a winning week, with the Dow up 0.5%, the S&P 500 gaining 1.4%, and the Nasdaq Composite advancing 2.6%.
The primary focus is on the nonfarm payrolls report, with investors seeking further evidence of economic slowing that could support interest rate cuts. This report follows the European Central Bank’s first rate cut since 2019, adding to the global monetary policy narrative.
3. Short Positions on Nvidia Soar
Nvidia continues to capture attention amid soaring interest in AI applications. Its stock has more than tripled over the past year, pushing its market capitalization past $3 trillion. However, short positions on Nvidia have also surged, with the notional value reaching $34.4 billion, about 1% of its market cap. Nvidia is now the largest short in the U.S. market, surpassing Apple
4. GameStop Volatility to Continue
GameStop is set for another volatile session after online influencer “Roaring Kitty” (Keith Gill) announced a livestream later today. Gill, a central figure in the 2021 meme stock rally, revealed a $116 million bet on GameStop after a three-year hiatus. The stock surged 20% on Monday following his Reddit post, gained nearly 50% on Thursday, and climbed another 30% in after-hours trading.
5. Crude Set for Hefty Weekly Losses
Crude prices remained largely flat on Friday but are on course for a third consecutive week of declines amid rising supply concerns. By 03:55 ET, U.S. crude futures were stable at $75.55 per barrel, while Brent futures dipped 0.1% to $79.84 per barrel. Saudi Energy Minister Prince Abdulaziz bin Salman attempted to address fears of increased OPEC+ output later this year.
We all should have reached weekly goal yesterday so today should be a chill day and with it being so data dependent I suggest being patient and laying low. I will be looking to short NVDA and META once weakness shows again. See you all in chat.
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