Stocks slide post Nvidia Q1 beat: What investors should do now

Despite the anticipation that Nvidia's (NVDA) earnings would contribute to market growth, stocks (^DJI, ^IXIC, ^GSPC) are sliding as the trading day draws to a close on Thursday. Carson Group Chief Market Strategist Ryan Detrick joins Market Domination to provide his insights on this market reaction.

Detrick acknowledges Nvidia's standout performance, referring to the company as "the all-star" and stating, "We've had a good run." With investors having closely monitored Nvidia for months leading up to the earnings release, Detrick suggests that "maybe markets are just due for a little pullback consolidation," expressing a lack of concern over the current downturn.

Regarding investment strategies, Detrick maintains a neutral stance on the tech sector due to elevated valuations. Instead, he advises focusing on financials, industrials, small-caps, and mid-caps, believing that as the economy strengthens, there will be "a rotation... into some of those areas that are a little bit cheaper."

However, Detrick cautions, "Just because something's cheap, it doesn't mean you want to go into it, but we're optimistic."

Hear more about Nvidia in this exclusive interview with CEO Jensen Huang.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Angel Smith

Video transcript

After Nvidia's block, Buster earnings lit a fire under A I optimism for investors for more on the report and what it means for the broader markets moving forward.

Let's welcome in here, Ryan Dietrich Carson Group chief Market strategist Ryan.

It is great to have you on the show.

So, you know, you look at NVIDIA as Julie was saying, Ryan NVIDIA reports, they beat, you know, street loves it.

Investors love it.

The stock rips.

But we look at the major averages all three in the red here, Ryan, how do you explain that?

What, what, what's going on here today's trade back, Josh.

I mean, you're right, NVIDIA is the all-star today.

It's been the all-star all year.

We know, but you just today, I mean, we'll see what happens in the final hour.

I know we've got an hour to go.

So maybe some buyers step in.

But my take is this, we've had a heck of a run right before today.

The S and P is up over close to 6% for me.

We've had a good run.

Maybe it is almost just some sell the news.

I know we're not selling the video very much but everybody had that bull's eye all month really with this news and it's not like anything major has changed.

Maybe markets are just due for, uh, you know, a little pullback consolidation.

I'm not overly concerned so far today.

Hey, Ryan, it's Julie here.

So how are you thinking about NVIDIA specifically?

And, and sort of tech more broadly?

Everybody was anticipating those results.

They came, they did better than expected.

Now what?

Yeah, the joke I said before was death taxes and NVIDIA beats on earnings.

I think those are three things we can always look forward to but or maybe not look forward to in some of those cases.

But nonetheless, um big picture, we're more neutral right here.

Technology, Julie.

And it's not because we don't like it.

It's just if you look at valuations like the last 20 years, keep this kind of simple tech valuations are like two standard deviations above their long term average.

That means they're really pricey.

Doesn't mean you can't be in it again.

We're more neutral tech to us.

We look at some of the other areas.

Financials, industrials are really cheap.

Uh historically and then small caps and midcaps.

I know those are kind of dirty words.

A lot of people have talked about them before.

Um But to us, the second half of this year could be more of a rotation, not necessarily out of tech, so to speak, but just into uh some of those areas that are a little bit cheaper.

Again, as the economy is strong, we get into that if you want and we think the economy is gonna be strong and those areas should do pretty well.

And, and so Ryan, so, so financial and industrial just let's drill into a little bit.

Is it, is it just a valuation call or, or no, there's other variables at play there?

Great point, Josh, o other variables, I mean, plain and simple.

We're pretty optimistic about the economy, right?

We think we think this economy is gonna continue to surprise the upside.

We've seen earnings surprise the upside.

We think those cyclical names will do better.

Kind of put a bow on this productivity.

We have not had strong productivity in our country for a long time.

Over the past year, we've had, we've had about 2.9% productivity.

That's pretty darn good, Josh.

We think activity can continue to stay strong uh going forward.

And what does that mean?

What does it mean to the listeners out there?

The mid to late nineties was the last time we saw strong productivity.

That's kind of that magic elixir that allows for GDP to come in better than expected.

And earnings remember last year, nominal GDP came in at 6% V. We were bullish.

We didn't think of coming at 6% last year.

Nobody saw that, but a lot of that was probably strong productivity.

So that's why we like the cyclical areas.

And so what are some of the specific cyclical areas that you guys?

I mean, like, I think of tech as a cyclical area too, but you'd rather look elsewhere here.

No good point there.

We would, I mean, specifically financials, industrials are the two groups that we are o are overweight.

Um, your materials and energy can lump in there or more even weight there.

But, but I think again, it's just where is the opportunity, right?

What, what's the market?

The market is always forward looking?

I mean, there's a lot of earnings growth potentially gonna come the next 12 months from small and midcaps.

People aren't talking about that.

And again, the small caps, if you look relative to large caps are as cheap as they've been in like 25 years, not just because something's cheap.

It doesn't mean you want to go into it, but we're optimistic.

We're gonna see some better inflation data starting to come.

We started to see rent prices start to crack a little lower that should lead to o and I only get two in the weeds here.

We know shelter is a big reason why um, inflation has been stubborn.

We think inflation is gonna really improve and that could open the door for two fed cuts.

And again, small midcaps and cyclicals should benefit.

In our opinion.

The rest of this year.