New York Stock Market Mixed Ahead of Nvidia Earnings and July PCE Inflation Data Release

NVIDIA to Release Earnings After Market Close on 28th
July PCE Inflation to Be Announced on 30th... Expected 2.5% YoY Increase

The three major indices of the U.S. New York Stock Exchange showed mixed trends on the 26th (local time). With Federal Reserve (Fed) Chair Jerome Powell hinting at a rate cut in September and the stock market approaching all-time highs, the market is awaiting the earnings report of AI leader Nvidia, which is due this week.

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As of 12:15 PM in the New York stock market, the Dow Jones Industrial Average, focused on blue-chip stocks, was up 0.04% from the previous trading day, standing at 41,190.03. The S&P 500, centered on large-cap stocks, was down 0.4% at 5,612.31, and the Nasdaq, focused on technology stocks, was trading 0.97% lower at 17,704.06.

On the previous trading day, the 23rd, the New York stock market rose across the board. This was a reaction to Powell’s statement that "the time has come to adjust policy," signaling a rate cut in September. He said, "The labor market is unmistakably slowing, and we do not want labor market conditions to cool further," adding, "Our goal is to maintain a strong labor market while avoiding a sharp rise in unemployment." He assessed that confidence has grown that inflation is sustainably slowing toward 2%. This indicated a shift in the focus of monetary policy from price stability to full employment.

Investors are confident in a September rate cut following Powell’s remarks. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market fully prices in a rate cut of at least 0.25 percentage points by the Fed in September. The probability of a 0.25 percentage point cut is 67.5%, while the chance of a 0.5 percentage point 'big cut' is priced at 32.5%.

Powell did not specify the exact size of the rate cut, stating that the pace depends on incoming data. However, the possibility of a big cut remains open depending on the August employment report released before the Federal Open Market Committee (FOMC) meeting on September 17-18. The unemployment rate surged from 4.1% in June to 4.3% in July, and if the August unemployment rate rises further, it could strengthen expectations for a big cut by the Fed.

David Russell, Global Chief Market Strategist at TradeStation, said, "Powell’s remarks will provide a tailwind to the market through the end of the year," adding, "It is expected that the market will find it difficult to hit lows this month (due to the rise)."

The market also expects Nvidia’s earnings report, to be released this week, to influence the stock market direction. Nvidia will announce its fiscal 2025 second-quarter (May-July) results after the market closes on the 28th. Both revenue and operating profit are expected to more than double, reaching $28.6 billion and $18.7 billion, respectively.

Chris Larkin, Head of Trading at Morgan Stanley eTrade, noted, "For the market to reach new highs this week, it must avoid major surprises in earnings," emphasizing, "Especially Nvidia, which has led sentiment in the technology sector, must avoid shocks in its earnings."

Attention is also focused on the July Personal Consumption Expenditures (PCE) price index, to be released on the 30th. The July PCE price index is expected to rise 0.2% month-over-month and 2.5% year-over-year, matching or slightly exceeding the previous month’s figures (0.1% and 2.5%, respectively). This stable inflation trend is expected to support the Fed’s outlook for a rate cut in September.

U.S. Treasury yields are slightly higher. The two-year Treasury yield, sensitive to monetary policy, rose 1 basis point to 3.92%, while the benchmark 10-year Treasury yield remained steady at 3.81%.

Among individual stocks, Boeing is down 1.1%. Reports emerged that NASA astronauts will use SpaceX spacecraft instead of Boeing’s, which delayed several returns to bring two astronauts back from the International Space Station (ISS). PDD Holdings, the parent company of the e-commerce platform Temu, is plunging 30.5% following disappointing quarterly results.

International oil prices are rising about 3% due to escalating tensions in the Middle East and production cuts in Libya. West Texas Intermediate (WTI) crude oil surged $2.47 (3.3%) to $77.3 per barrel, while Brent crude, the global benchmark, rose $2.28 (2.89%) to $81.3 per barrel.