Rosalind Evans
Wall Street remains stable, anticipating potential market-defining events later this week.
The S&P 500 dipped slightly by 0.1% around midday, following an uncommon rise in August, driven primarily by major tech stocks on Monday. As of midday Eastern time, the Dow Jones had dropped by 132 points, or 0.4%, to 34,3331, while the Nasdaq saw an increase of 0.3%.
The stock market faced challenges this month due to increasing bond yields, which intensifies the strain on other investments. The 10-year Treasury yield fluctuated on Tuesday after hitting its peak since 2007 the previous day.
Nvidia, a pivotal stock on Wall Street, experienced a shift from an early rise to a 2.5% drop as it approaches its Wednesday earnings report. The firm stands at the forefront of the AI technology wave, a domain investors predict will yield significant profits. With Nvidia’s stocks having tripled this year, the upcoming earnings report is under scrutiny.
Analysts anticipate Nvidia to announce a nearly $4.5 billion revenue surge, reaching $11.19 billion this spring, up from last year.
Microsoft, another tech giant, played a crucial role in pushing the S&P 500, with its stocks climbing 0.6%. This growth comes as U.K. authorities contemplate Microsoft’s revised proposal to acquire Activision Blizzard, a deal that might be historic in the tech sector.
Additionally, Lowe’s stocks rose by 3.6% after surpassing profit expectations for the recent quarter. The company remains confident about its yearly forecast, highlighting over $100 million in bonuses for its primary staff.
However, not all were positive. Dick’s Sporting Goods saw a steep 24.2% drop after their quarterly profits missed the mark. They also revised their annual earnings projections due to “inventory shrink” – a phrase commonly used in the industry to denote theft and loss of unsold goods.
Although Macy’s experienced a 13.1% stock drop, it reported stronger quarterly results than anticipated but voiced concerns regarding the unpredictable economic landscape.
In the bond realm, the 10-year Treasury yield slightly decreased to 4.32% from 4.34% the previous day, influencing mortgage and loan rates. Meanwhile, the two-year Treasury yield, influenced by Federal Reserve predictions, went up to 5.01% from 5.00%.
The financial world is keenly awaiting Fed Chair Jerome Powell’s speech this Friday in Jackson Hole, Wyoming – an event that historically brought major policy revelations. Market experts, including strategists Stefano Pascale and Anshul Gupta from Barclays, suggest that this speech might overshadow Nvidia’s earnings announcement.
Historically, Jackson Hole has led to significant market shifts, ranging from commodities and bonds to international stocks. The Fed has recently increased its primary interest rate, aiming to combat inflation, which has seen a decrease since its peak last year. However, achieving the desired rate remains a challenge.
Market players hope for Powell to hint at the end of the interest rate hikes and potential cuts in the following year. Nonetheless, the robust U.S. economic data might dampen these hopes.
Overseas, the majority of stock markets showcased positive trends. Following concerns about its economic rebound, Chinese stocks are rebounding. The Hang Seng in Hong Kong increased by 1%, although it’s still down by 11.4% this August. Meanwhile, Shanghai’s market rose by 0.9%, reducing its monthly loss to 5.2%.
The global financial landscape remains intricate and dynamic. Wall Street’s current stability is juxtaposed with the heightened anticipation of Jerome Powell’s forthcoming speech and the performance of tech giants like Nvidia and Microsoft. As market players decipher these variables and shifts in overseas stock markets, it’s evident that the latter half of the year will be crucial in setting the economic tone for 2024.
