[New York Stock Market] Nasdaq Falls 1.12% Amid Broad Decline and Caution Over Nvidia Earnings...

NVIDIA to Announce Earnings After Market Close
Revenue and Operating Profit Expected to Double Year-on-Year
Blackwell Timely Supply and AI Demand Outlook Key
July PCE Inflation to Be Released on the 30th

The three major indices of the U.S. New York stock market closed lower on the 28th (local time). Technology stocks collectively declined as market caution deepened due to concerns over Nvidia's earnings report, which was released after the market closed that day. Investors are expected to gauge the future sustainability of the tech sector and the stock market rally through Nvidia's earnings, the leader in artificial intelligence (AI).

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In the New York stock market that day, the Dow Jones Industrial Average, centered on blue-chip stocks, closed at 41,091.42, down 159.08 points (0.39%) from the previous trading day. The S&P 500, focused on large-cap stocks, fell 33.62 points (0.6%) to 5,592.18, and the Nasdaq, centered on technology stocks, dropped 198.79 points (1.12%) to 17,556.03.

By individual stocks, technology shares showed weakness. Nvidia fell 2.1%. Amazon declined 1.34%, while Alphabet, Google's parent company, and Microsoft (MS) dropped 1.13% and 0.78%, respectively. Super Micro Computer, an AI beneficiary, plunged 19.02% after Hindenburg Research released a short-selling report the previous day and announced a delay in submitting its annual financial report that day. U.S. retailer Nordstrom jumped 4.21% following better-than-expected Q2 earnings. Semiconductor developer Ambarella surged 10.63% after raising its Q3 revenue outlook. Bank of America (BoA) rose 0.71% despite Berkshire Hathaway, led by investment guru Warren Buffett, announcing an additional sale of BoA shares worth $981.9 million. PVH, the parent company of Calvin Klein, fell 6.42% after issuing a disappointing earnings forecast.

Nvidia is set to release its fiscal 2025 Q2 (May-July) earnings after the market closes that day. According to market research firm FactSet, Nvidia is expected to report Q2 revenue of $28.7 billion and net income of $15.1 billion, more than doubling compared to a year ago. Whether Nvidia meets these earnings expectations is crucial. Additionally, the timely supply of Nvidia's latest AI chip, Blackwell, and updates on AI demand will be key points to watch. The market is expected to assess the broad sustainability of tech and AI stocks through Nvidia's earnings. Nvidia's stock price rose 28% from May 5 to 23, during which the market capitalization of the large-cap-focused S&P 500 index increased by $4 trillion.

Shana Sissel, founder of Vanlion Capital Management, said about Nvidia, "It should not be the economic barometer," but added, "Due to the size of the stock and its influence on the overall market, it has become a barometer."

Erin Brown, managing director and portfolio manager at PIMCO, the world's largest bond manager, said, "Other AI stocks are trading about 10% below their peak prices, and Nvidia's current valuation is not expensive compared to the five-year average," adding, "Although the market has priced in a lot of optimism, it can still surprise the market by continuing its upward trend."

On the 30th, the U.S. Federal Reserve's most closely watched inflation indicator, the July Personal Consumption Expenditures (PCE) price index, will be released. The PCE price index is estimated to have risen 0.2% month-over-month and 2.5% year-over-year last month. This would mean that the core PCE inflation rate has slowed to 2.1% over the past three months, approaching the Fed's target of 2%. On the 29th, a day earlier, the weekly initial jobless claims report for the previous week will be released. Market experts expect the figure to be 234,000, slightly up from the previous week's 232,000.

Investors have become more confident in a September rate cut following Fed Chair Jerome Powell's speech at the Jackson Hole meeting on the 23rd. According to the Chicago Mercantile Exchange (CME) FedWatch tool, 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 63.5%, while the chance of a 0.5 percentage point 'big cut' is 36.5%.

U.S. Treasury yields were steady. The benchmark 10-year U.S. Treasury yield rose 1 basis point (1 bp = 0.01 percentage points) to 3.84%, while the 2-year Treasury yield, sensitive to monetary policy, remained at 3.87%.

International oil prices declined. West Texas Intermediate (WTI) crude fell $1.01 (1.34%) to $74.52 per barrel, and Brent crude, the global oil price benchmark, dropped $0.90 (1.13%) to $78.65 per barrel.