Major indices on the U.S. New York Stock Exchange showed gains in early trading on the 23rd (local time) as investors awaited Nvidia's earnings announcement. Later this week, Federal Reserve Chair Jerome Powell is scheduled to speak at the economic symposium, the ‘Jackson Hole Meeting.’
At around 10 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average, composed of blue-chip stocks, was trading 81.01 points (0.24%) higher than the previous close, around the 34,369 level. The S&P 500, focused on large-cap stocks, rose 23.36 points (0.53%) to the 4,410 level, while the tech-heavy Nasdaq index was up 113.97 points (0.84%) at 13,619.
Currently, eight of the eleven sectors in the S&P 500, excluding energy, utilities, and materials, are all trading higher. Nvidia, which is set to report earnings after the market close, was trading about 1.6% higher than the previous close. Major tech stocks such as Apple, Amazon, Microsoft (MS), and Tesla were also rising. Peloton slid more than 20% after its pre-market quarterly earnings report showed a larger-than-expected loss per share. Foot Locker dropped over 30% after reporting a decline in quarterly sales and lowering its future outlook. Dick's Sporting Goods, which fell double digits the previous day due to disappointing earnings, was also down about 3% today. In contrast, apparel company Abercrombie & Fitch jumped about 24% on better-than-expected earnings.
Investors are closely watching Nvidia’s earnings report, which will be released after the market closes, along with earnings from major retailers, key economic indicators, and movements in Treasury yields. Most Wall Street analysts currently expect Nvidia’s Q2 earnings to beat market estimates and foresee further gains in Nvidia’s stock price. Ben Wright, an analyst at Melius Research, told Bloomberg, "Nvidia’s earnings guidance will drive overall sentiment related to artificial intelligence (AI)." Economic media outlet CNBC reported, "Investors will look to Nvidia’s earnings report for signals on whether the market will resume its upward trend this year or if the August downturn will persist." The S&P 500 has fallen more than 4% so far this month.
The economic symposium ‘Jackson Hole Meeting’ will be held from the 24th to the 26th in Wyoming, USA. The event will be attended by Chair Powell, European Central Bank (ECB) President Christine Lagarde, central bank governors from various countries, senior officials, and leading economists. Investors are particularly focused on Chair Powell’s economic outlook speech scheduled for 10:05 a.m. Eastern Time on the second day, the 25th. Given concerns about inflation and economic slowdown, and with the monetary tightening cycle nearing its end, the market impact of his remarks is expected to be significant. Powell is anticipated to reaffirm a data-dependent stance and keep the door open for further rate hikes if necessary.
In the New York bond market, Treasury yields are trending lower. Recently, yields have risen mainly on long-term bonds due to expectations of a soft landing, concerns over prolonged Fed tightening, and increased Treasury issuance by the U.S. Treasury Department. The benchmark 10-year Treasury yield is currently around 4.22%, while the 2-year Treasury yield, which is sensitive to monetary policy, is trading near 4.94%. The dollar index, which measures the value of the U.S. dollar against six major currencies, is steady around 103.5.
The U.S. manufacturing sector showed contraction. According to S&P Global Market Intelligence, the preliminary Purchasing Managers’ Index (PMI) for manufacturing in August was 47.0, below both Wall Street expectations and the previous month’s 49. The PMI indicates contraction below 50 and expansion above 50. The services sector also weakened, with the preliminary services PMI for August falling to 51.0, the lowest in six months.
On the other hand, new home sales in July showed stronger-than-expected growth. According to the U.S. Department of Commerce, new home sales in July rose 4.4% month-over-month to 714,000 units, exceeding Wall Street’s forecast of 1.0%. Compared to the same month last year, sales increased by 31.5%.
International crude oil prices are declining amid weak economic data. October West Texas Intermediate (WTI) crude is trading over 1% lower than the previous close at around $78.8 per barrel.
European stock markets are mixed. The UK’s FTSE index rose 0.47%, while Germany’s DAX and France’s CAC indices showed slight declines.
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