[New York Stock Market] "Not Powell but Jensen Huang's Turn"... Nvidia Ends Slightly Up Ahead of Earnings

Ahead of Nvidia's earnings on the 28th, a 'waiting game' market
Focus on July PCE inflation rate to be released on the 30th

The three major indices of the U.S. New York Stock Exchange closed slightly higher on the 27th (local time). With the AI rally and Nvidia's earnings announcement, which could determine the direction of the stock market, scheduled for the next day, investors remained cautious, resulting in little movement in the market.

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On this day in the New York stock market, the blue-chip-focused Dow Jones Industrial Average closed at 41,250.5, up 9.98 points (0.02%) from the previous trading day. The large-cap-focused S&P 500 index rose 8.96 points (0.16%) to 5,625.8, and the tech-heavy Nasdaq index gained 29.06 points (0.16%) to close at 17,754.82.

Investors are closely watching Nvidia's earnings, which have become an indicator of the AI rally. Nvidia will announce its fiscal 2025 second-quarter results (May to July) after the market closes on the 28th. Revenue and operating profit are expected to more than double, reaching $28.6 billion and $18.7 billion, respectively. Through Nvidia's earnings, investors will be able to gauge whether the tech-led stock market rally driven by AI expectations will continue.

Ross Mayfield, an analyst at Baird, said, "There is little important economic data until Nvidia's earnings come out. The current market is in a rotation phase moving away from tech stocks toward small and mid-cap stocks. Nvidia could change everything tomorrow, but until then, the market is expected to maintain its current trend."

Anthony Saglimbeni, senior market strategist at Ameriprise Financial, analyzed, "Nvidia's earnings report could have a stronger impact on the overall market than Fed Chair Jerome Powell's speech at the Jackson Hole meeting last week. Now, it is Jensen Huang, Nvidia's CEO, rather than Powell, who will move the market."

After Nvidia releases its earnings, key economic indicators will be announced. On the 29th, the number of new unemployment claims from the previous week will be released. Market experts expect this figure to be 234,000, a slight increase from the previous week's 232,000. On the 30th, the Fed's most closely watched inflation indicator, the July Personal Consumption Expenditures (PCE) price index, will be published. The PCE price index is estimated to have risen 0.2% month-over-month and 2.5% year-over-year last month. As a result, the core PCE inflation rate is expected to have slowed to 2.1% over the past three months, approaching the Fed's target of 2%.

Investors have become more confident in a rate cut in September following Powell's Jackson Hole speech. 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 next month is 65.5%, while the chance of a 'big cut' of 0.5 percentage points is 34.5%. The size of the September rate cut is believed to depend on the August employment report to be released by the U.S. Department of Labor on the 6th of next month. If the unemployment rate, which rose from 4.1% in June to 4.3% in July, increases further in August, the likelihood of a big cut is expected to rise.

Government bond yields showed mixed movements. The U.S. 10-year Treasury yield, a global bond yield benchmark, rose 2 basis points (1bp = 0.01 percentage points) to 3.84%, while the 2-year Treasury yield, sensitive to monetary policy, fell 3 basis points to 3.9% compared to the previous day.

Among individual stocks, Nvidia rose 1.46% ahead of its earnings announcement. Food company Hein Celestial surged 18.59% after reporting better-than-expected quarterly results. AI company Super Micro Computer fell 2.64% after Hindenburg Research, a U.S. short-selling firm, released a report targeting it for short selling due to alleged accounting fraud and export control violations.

International oil prices fell on concerns that demand may decrease due to potential economic slowdowns in the U.S. and China. West Texas Intermediate (WTI) crude oil closed at $75.53 per barrel, down $1.89 (2.4%) from the previous trading day, while Brent crude, the global oil price benchmark, fell $1.88 (2.3%) to $79.55 per barrel.