The Nasdaq Composite and S&P 500 sold off again to start the week, with the 10-year Treasury yield reaching its highest level in approximately a year. Monday's move extends Friday's tech weakness. Yields are now the dominant signal on tech-multiple compression ahead of Nvidia's Q1 earnings on Wednesday after the close.
The setup for Wednesday matters more than today's print. Nvidia is expected to report approximately $78.8B in revenue and roughly $1.77 in EPS. The street has been modeling 18% sequential growth on data center compute. The yields backdrop changes the multiple math even before the print lands. At 4.5%+ on the 10-year, the post-print rally that has historically followed Nvidia beats faces a steeper hurdle. The same fundamental result that would have produced a 5-7% pop at 4.0% yields produces a flat-to-negative reaction at 4.6%+. Three other names report before Nvidia: Palo Alto Networks today, Target Wednesday morning, and TJX Wednesday morning. None of those is an AI-bellwether print. The bellwether is Nvidia at the close Wednesday. Position-sizing through Wednesday's open is the trade-off that matters this week. Net long the AI infrastructure trade and you absorb the yields risk through Wednesday. Net short or flat and you may miss the post-print rally if guidance comes through clean.
For tech-heavy portfolios: Wednesday after the close is the print to watch. The yields setup says the bar for a sustained rally on a beat is higher than usual. For Nvidia shareholders specifically: be prepared for either direction; the Q2 guide is what determines whether the rally extends through Q3 earnings season.