[New York Stock Market] All Major Indexes Rise Despite 'Trump's Dismissal of Cook'...Anticipation for Nvidia Earnings

Nvidia Earnings Expectations Support Investor Sentiment on the 27th
Trump: "We Will Secure a Majority on the Fed Board"
Central Bank Pressure Intensifies After Cook's Dismissal
Dollar and 30-Year Treasury Prices Decline

The three major indices of the New York Stock Exchange closed slightly higher across the board on August 26 (local time). Investor sentiment, which had been dampened by President Donald Trump's attempts to pressure the Federal Reserve (Fed), recovered somewhat on the back of expectations for Nvidia's earnings to be announced the following day.

Reuters Yonhap News

On this day, the blue-chip Dow Jones Industrial Average closed at 45,418.07, up 135.6 points (0.3%) from the previous session. The S&P 500 Index, which focuses on large-cap stocks, rose 26.62 points (0.41%) to 6,465.94, while the tech-heavy Nasdaq Index climbed 94.978 points (0.44%) to 21,544.27.

By stock, Nvidia, which will announce its earnings after the market closes on the 27th, rose 1.09%. Apple gained 0.95%. Microsoft increased by 0.44%, while Alphabet, Google's parent company, declined by 0.58%. Eli Lilly surged 5.85% after successfully completing clinical trials for its obesity treatment. EchoStar soared 70.25% on news that AT&T would purchase rights to use a specific frequency band for $23 billion.

The market initially declined due to concerns over the Fed's independence being undermined, but rebounded as investors focused on Nvidia's earnings. According to market research firm FactSet, Nvidia is expected to report $46.05 billion in second-quarter revenue and earnings per share (EPS) of $1.01.

Anthony Saglimbene, Chief Market Strategist at Ameriprise, said, "Nvidia's earnings are expected to be solid," adding, "Whether Nvidia meets the market's high expectations or provides an outlook that exceeds market forecasts will influence future market reactions."

For now, investors have set aside concerns over President Trump's attempts to interfere with the Fed's independence, but tensions persist. At a Cabinet meeting at the White House on this day, President Trump claimed, "We will very soon secure a majority on the Fed Board," and added, "Once we have the majority, the housing market will turn around and the situation will become excellent." He further emphasized, "People are burdened with excessively high interest rates. We need to lower rates somewhat." Following the abrupt dismissal of Fed Governor Lisa Cook the previous day over allegations of mortgage fraud, Trump revealed his intention to reshape the Fed Board with individuals who would support his push for rate cuts.

The current Fed Board consists of seven members: one Chair, two Vice Chairs, and four Governors. If Cook, who has hinted at legal action against her dismissal, is ultimately removed and President Trump appoints a pro-Trump figure as her replacement, at least four out of the seven members are expected to support rate cuts. Of the 12 members with voting rights on the Federal Open Market Committee (FOMC), the seven Fed Board members serve as ex officio members. If the majority of the Board advocates for rate cuts, it could significantly influence the remaining five members as well.

In response, Cook has announced her intention to take legal action against President Trump's dismissal.

As President Trump's attempts to reshape the Fed become more overt, the value of the dollar and prices of ultra-long-term U.S. Treasury bonds, which reflect long-term confidence in the U.S. economy, have declined. The dollar index, which measures the value of the dollar against the currencies of six major countries, is down 0.17% from the previous day at 98.15. Yields on U.S. Treasury bonds, which move inversely to prices, have risen, with the 30-year yield up 3 basis points (1bp = 0.01 percentage point) to 4.92%. In contrast, the yield on the 2-year Treasury, which is sensitive to monetary policy and could be influenced by a Fed Board restructured in favor of rate cuts, has fallen 4 basis points from the previous day to 3.68%.

Adam Crisafulli, founder of Vital Knowledge, stated, "For now, the market is likely to quickly move past the news about Governor Cook and shift its focus to Nvidia's earnings, the Personal Consumption Expenditures (PCE) price index, and employment data." However, he warned, "The Fed's independence is indisputably being undermined, and this process will have negative long-term consequences."

The market is closely watching two remaining major events this week: Nvidia's earnings, to be announced the next day, and the earnings of Dell and Marvell, which will be released on August 28. On August 29, the U.S. Department of Commerce will announce the July PCE price index.