Financial districts are contemplating the state of the American economic landscape.
As investors process Nvidia's remarkable earnings report, Wall Street's focus has shifted towards the potential rate hike in September. The American economy is performing better than anticipated, which is beneficial for stocks.
Wall Street ended in a fluctuating fashion on Thursday. The S&P-500 and tech-dominated Nasdaq-Index surrendered their earlier gains in the late trading sessions. The Dow Jones Index concluded 0.6% higher at 41,335 points. The S&P-500 essentially remained unchanged, while the Nasdaq Composite dipped 0.2%. There were 1,875 winners (previously 1,042), 910 losers (previous 1,729), and 77 stocks that ended the day unchanged (previously 97).
Nvidia's extraordinary earnings report, which surpassed expectations with revenue and earnings more than doubling, was a topic of interest. However, the optimism was dampened by the unimpressive outlook. Both the revenue projection and gross margin forecast indicated a decrease compared to the previous quarter. Moreover, the new chip generation ("Blackwell") is slated to commence production a quarter later than expected. Consequently, Nvidia's shares plummeted 6.4%, and the semiconductor sub-index of the S&P-500 declined 3.7%.
Anticipation for pricing data on Friday
Following Nvidia's numbers, investor interest has been rekindled in U.S. economic data and its potential influence on the Fed's monetary policy. However, it will be intriguing to observe what transpires on Friday, when the PCE Deflator for U.S. consumer spending in August is released.
On the economic front, the U.S. GDP growth in the second quarter was upgraded to an annualized rate of 3.0% from the initial 2.8% estimate. Initial jobless claims also remained almost consistent, decreasing by 2,000 to 231,000.
Dollar rally continues - Oil prices escalate once more
In the forex market, the dollar continued to strengthen, extending its recent rally following a 13-month low. The dollar index increased 0.3%. According to Validus Risk Management, the data released on Thursday indicates that the Fed may not reduce interest rates as aggressively as some investors anticipate, bolstering the dollar. "There's some uncertainty in the market about whether the Fed will decrease rates by 25 or 50 basis points at the September meeting, and today's data suggests a 25 basis point reduction."
The bond market also witnessed an upward trend in yields after the economic data. The data reassured investors about the Fed's likelihood of not requiring aggressive interest rate cuts. The yield on 10-year notes climbed 3.0 basis points to 3.87%.
Oil prices surge again after recent reductions
Oil prices increased once more following recent cuts. Brent and WTI prices soared by up to 1.9 percent. Improved-than-anticipated GDP data contributed to the price surge, suggesting enhanced energy demand, as per reports.
Gold price rises 0.7 percent to $2,522
The gold price escalated 0.7 percent to $2,522. Investor and central bank demand remains robust, and long-term expectations remain optimistic, according to Hani Abuagla, Senior Market Analyst at XTB MENA. Although a correction or profit-taking cannot be disregarded, gold continues to look promising in the long run and can shield against volatility in other assets.
Apple gains while HP plunges
Apple (+1.5%) seems to be banking on the success of its early AI-integrated iPhones. According to the Nikkei Asia newspaper, citing knowledgeable sources, Apple has instructed its suppliers to prepare components and parts for approximately 88 to 90 million smartphones. Additionally, there are talks about an Apple investment in OpenAI, which would fortify its relationship with a vital AI partner.
Salesforce (-0.7%) surpassed expectations in revenue, earnings, and operating margin in the second quarter and raised its outlook. HP (+2.0%) exceeded revenue expectations in the third quarter, but earnings fell short of consensus estimates.
Crowdstrike shares escalate 2.8 percent
Crowdstrike earned more than expected in its second fiscal quarter, but it lowered its annual targets and issued a pessimistic outlook for the current quarter. Despite being affected by one of the worst IT outages ever, Crowdstrike's second quarter was better than predicted, UBS stated.
Despite the positive impact of Nvidia's earnings report on the overall market, Wall Street's focus shifted towards the potential interest rate hike in September, with concerns surrounding Nvidia's revised chip generation production schedule affecting tech stocks. Amidst this, Wall Street's major indices showed mixed results, with the Dow Jones Index closing 0.6% higher, while the S&P-500 and Nasdaq Composite ended with minimal changes and declines, respectively.
