Why Nvidia Earnings May Trigger Massive S&P 500 Volatility

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Investors and speculators are gearing up for Nvidia Corp.‘s (NASDAQ:NVDA) earnings report on Wednesday, an event that’s expected to send ripples, if not tidal waves, across the U.S. stock market.

If the options market is right, Nvidia’s results could spark moves in the S&P 500 index – as tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY) – larger than those typically triggered by key economic data like the employment and inflation reports.

Nvidia’s dominance in the AI-driven technology trade has turned its earnings into a barometer for overall market sentiment, and its influence on the stock market is unparalleled.

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Over the past year, Nvidia accounted for 20% of the S&P 500’s total returns and Bank of America’s derivatives analyst Gonzalo Asis didn’t mince words: “It remains the most dominant stock in the market… expected to drive nearly 25% of the S&P 500’s EPS growth in 3Q.”

In essence, whether Nvidia beats or misses expectations, the ripple effects will likely extend far beyond its ticker.

The options market implies a potential 1.05% move in the S&P 500—higher than what traders expect from next month’s Non-Farm Payroll (NFP) data, Consumer Price Index (CPI) print, and in line with the Federal Reserve’s December meeting.

“Options are assigning more broad-market risk around NVDA earnings than around next month’s NFP and CPI days, and as much as the Dec FOMC,” the analyst noted.

For Nvidia shares themselves, the implied one-day move is even more eye-popping: 12.5%.

“We remain cautious of fragility risks in single names around earnings, but NVDA hedges themselves are not particularly cheap relative to how much the stock has reacted to results in the last two years,” Assis wrote.

The analyst also warned that the recent easing of post-election euphoria and heightened single-stock fragility can be reasons for traders to hedge against potential market turbulence if Nvidia disappoints.

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