Shares of Jensen Huang's company have struggled to make headway since the previous results day

All eyes on Nvidia next week - and lots of pressure.

It's been a week dominated by the bond market. The vacillation in Treasurys following the government's pledge to suppress longer-duration yields have rattled stock investors, too.

Next week, however, traders can try and refocus on equity fundamentals when Nvidia (NVDA) releases its earnings and guidance after Wednesday's close.

The problem for bulls is that to support the wider market, Nvidia may need to break a disappointing trend, according to the team at Bespoke Investment.

Before we explain that, here's the setup. There's been some chatter of late that the most important stock in the market currently is Micron Technology $(MU)$, because the supply/demand imbalance for its memory chips acts as a thermometer for the broader technology sector, particularly the artificial-intelligence build-out.

But Nvidia remains the dominant force. Its earnings still serve as a barometer of the health of the AI ecosystem. Crucially, the company run by Jensen Huang sits at the center of much of the dealmaking that's shaping the AI boom.

And with a capitalization of $5.26 trillion, Nvidia is the market's biggest company, carrying a 7.6% weighting in the S&P 500. The company is second in the list of hedge funds' "very important positions" (Amazon is first), according to Goldman Sachs.

With such sentiment and statistical heft, the reaction to Nvidia's earnings can thus still shape the broader market. Option traders are currently pricing in a move from now until close of play next Friday of plus or minus 5.3% for Nvidia stock, which is a top to bottom range of some $562 billion of market cap, according to MarketWatch calculations using FactSet data.

A positive for Nvidia investors is that shares haven't seen the kind of pre-earnings surge that could lead to profit taking even if it delivers good news. Indeed, since the company's previous earnings report, the stock has gained only about 1%. Furthermore, it's relatively cheap by historical standards, with its next 12-month share price-to earnings ratio at around 20, way down from the five-year average of 63, according to FactSet.

So, the set up for Nvidia looks promising. But there's a problem, says Bespoke in commentary posted late Thursday. The research and analytical boutique says Nvidia is "a triple-play king, meaning it consistently beats EPS and revenue estimates and raises guidance." EPS stands for earnings per share.

Indeed, Nvidia has reported 14 earnings triple plays in the 20 quarterly reports it has had in the last five years, according to Bespoke.

However, on each of Nvidia's last three triple plays, shares have actually finished down on the day.

"For most companies, it's not common to report an earnings triple play, but for NVDA, it's now expected. Recent negative share-price reactions to the positive news are evidence of that," says Bespoke.

"In baseball, you can't do better than a triple play on defense," they add. "Fortunately for NVDA CEO Jensen Huang, he's not playing baseball, but it looks as if NVDA needs to do even more than simply reporting a triple play to get a post-earnings boost."

The markets

U.S. stock-index futures (ES00) (YM00) (NQ00) are higher as Treasury yields BX:TMUBMUSD10Y dip. The dollar index DXY is lower, as oil futures (CL.1) slip and gold futures (GC00) trade around $4,640 an ounce.

 
Key asset performance                                                Last       5d      1m      YTD     1y 
S&P 500                                                              7707.98    -0.52%  2.79%   12.60%  20.52% 
Nasdaq Composite                                                     26,331.09  -0.97%  2.49%   13.29%  24.36% 
10-year Treasury                                                     4.676      2.90    -2.40   50.40   34.60 
Gold                                                                 4544.5     3.12%   12.15%  4.90%   34.31% 
Oil                                                                  86.39      6.38%   -6.46%  50.48%  36.09% 
Data: MarketWatch. Treasury yields change expressed in basis points 

Take control of your news. Make MarketWatch your preferred source on Google.

The buzz

Samsung Electronics (KR:005930) said it will buy back up to 110 trillion won of shares, or $78.88 billion.

Ross Stores shares $(ROST)$ are jumping after the off-price retailer beat Wall Street revenue and profit expectations in the latest quarter.

BJ's Wholesale Club (BJ) will release earnings before the opening bell.

U.S. economic data due Friday include the flash manufacturing and services purchasing managers' indexes for August, released at 9:45 a.m. Eastern.

London's cabbies prepare to battle the robotaxis.

The chart

Ben Snider and team at Goldman Sachs have just published their latest Hedge Fund Trend Monitor, which shows an important driver in the stock market selloff that accelerated in July. Hedge funds were replete with technology plays going into the third quarter, they note. And the reason the Nasdaq underperformed last month was partly because hedge fund de-grossing - the selling of long positions and closure of short positions - "was particularly sharp," they say.

Top tickers

Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.

 
Ticker  Security name 
SPCX    SpaceX 
NVDA    Nvidia 
TSLA    Tesla 
MRNA    Moderna 
MU      Micron Technology 
MSTR    Strategy 
AAPL    Apple 
SNDK    Sandisk 
META    Meta Platforms 
AMD     Advanced Micro Devices 

Instagram's "Rate this Bench" finally finds perfection.

-Jamie Chisholm