Nvidia stock slumps despite bumper earnings

• European markets on the rise despite French political concerns.
• Nvidia stock slumps despite bumper earnings.
• US GDP and jobless claims ahead.

Mainland European equities are finding their footing this morning, with the CAC 40 up about 0.8% despite the ongoing clouds of political risk that loom large ahead of the September 8th vote of no confidence in France. The opposition have shown little willingness to support Bayrou in his bid to slash spending, and the Polymarket pricing signals a 94% chance that the PM is out the office by September. Investors seem willing to discount the near-term noise, with a focus instead on solid corporate earnings and easing bond yields across the region. The DAX and Euro Stoxx 50 are also trading firmer, with sentiment buoyed by the positive handover from Asia, where the Nikkei rose more than 0.7%. For now, Europe is leaning into resilience rather than fear, though politics could easily reassert themselves in the weeks ahead.

Nvidia delivered another blowout quarter on the numbers, but the market’s reaction told a different story. Shares pulled back after management’s guidance, which, while strong, fell short of the sky-high expectations that have surrounded the stock. Put simply: investors wanted fireworks, not just a solid beat. The reaction underscores a broader issue - when a stock is priced for perfection, even great results can disappoint. The market seems to be asking whether Nvidia can keep up this pace as competition intensifies and AI enthusiasm starts to look a little overbought. Yesterday was less about fundamentals and more about sentiment catching up with reality. In fact, the reality that they have managed to post such impressive numbers despite losing their entire Chinese business does bode well if they manage to find a solution for that region.

Attention now shifts to the US economy, with weekly jobless claims and the latest GDP revision due later today. Claims will offer the most timely read on the labour market, with traders watching closely for any signs that further heighten concerns in the wake of the jobs report just under a month ago. With last week’s continuing jobless claims coming in at the highest level since 2021, this report has been one leading indication of stress within the jobs market. Meanwhile, the GDP revision may sharpen the picture of US growth momentum. Taken together, these releases will help frame expectations ahead of next week’s payrolls report. With equities already jittery after Nvidia’s stumble, the data has the potential to either soothe nerves or amplify volatility into the close.