(These are the market notes on today’s action by Mike Santoli, CNBC’s Senior Markets Commentator. See today’s video update from Mike above.) -Heading into Nvidia’s report, the market leans closer to hope than fear, the majority of stocks green, the big-cap indexes holding at record highs and little concern being registered about potential economic and market impacts of threats to Fed independence. -This likely says less about any collective foresight into the particulars of Nvidia’s quarter and outlook than about investor comfort with the benign rotation dynamics of this market, which for now are riding a confident consensus that the economy is OK, earnings are rising, the broad AI theme has room to run and the Fed appears somewhat likely to trim borrowing rates into all this. -At more than an 8% weighting in the S & P 500 and as the chief beneficiary of the most important corporate-spending priority of the moment, Nvidia and the reaction to its numbers matters quite a bit. But the stock doesn’t always act as a reliable bellwether in either direction for the tech sector of the broad market. -What will be most worth tracking is whether the move in NVDA – up or down – simply touches off another round of offsetting rotation. Heading in, it’s a “broadening” day rather than a “narrowing” session. Breadth is 3:2 positive across NYSE and Nasdaq and the small-cap Russell 2000 is outperforming. This is a dimmed version of Friday’s “rate cut playbook” dynamic. -Beyond Nvidia’s numbers, PCE inflation on Friday at least has a long-shot chance to be consequential. Any data that looks stagflationary in either direction would be a challenge to the prevailing “good news rate cuts” consensus right now. -Broadly speaking, US economic data are holding up OK, outside of the broader labor-market indicators showing a looser, less-generous job market. PMI indexes, durable-goods orders, Atlanta Fed Q3 GDP tracking all seem fine. And, importantly, market across the world are appearing to price in relatively brisk activity. China and Japan equities surging lately, government bod yields up globally, European banks up a ton. -Still, much talk among sell-side trading desks about how the market seems a bit complacent about the chance for sub-optimal data into the tough seasonals of September, or the risks of a more politicized Fed biased toward aggressive easing. Prudent warnings about plausible risks, perhaps. But it’s, in a certain way, reassuring that multiple voices are calling out complacency, which works against the idea that everyone is complacent. -Equities can be fine with irresponsibly loose monetary policy for a good while, if that’s what critics fear we’ll get, though only until it inflames inflation above the recent range, drives bigger rises in long-term yields or erodes consumer real incomes. So far, the Treasury yield curve’s steepening action has remained within the longstanding yield ranges. -Energy stocks perking up on the day as crude oil bounces and traders not extreme bearish positioning in the futures market leaving the market susceptible to a squeeze higher. -Seeing some fatigue in the speculative retail playthings: PLTR, HOOD, BMNR all down a few percent. Constructive cooling of overheated pockets or an indicator of a fading risk bid?
