Nvidia Earnings Set for Release After Market Close
Assessing AI Investment Sustainability and Outlook for China Operations
Trump Says "Fed Board Majority Will Be Secured Soon"
U.S. 10-Year and 30-Year Treasury Yields Climb
50% Tariff on India Also Takes Effect
On August 27 (local time), the three major indices on the New York Stock Exchange were mixed in early trading, remaining largely flat. As investors took a wait-and-see approach ahead of Nvidia's earnings announcement scheduled after the market close, sentiment was pressured by a rise in long-term U.S. Treasury yields, which was triggered by the White House's attempt to exert control over the Federal Reserve. The value of the dollar also reversed course and began to rise.
As of 9:55 a.m. on the New York Stock Exchange, the blue-chip Dow Jones Industrial Average was up 86.45 points (0.19%) from the previous trading day, standing at 45,504.52. The S&P 500 Index, which focuses on large-cap stocks, was down 0.14 points (less than 0.01%) at 6,465.8, while the tech-heavy Nasdaq Index was trading at 21,506.07, down 38.2 points (0.18%).
By stock, Nvidia was down 0.93%. Apple was up 0.13%, whereas Tesla was down 0.38%. MongoDB and Okta surged by 33.31% and 2.88%, respectively, following earnings reports that exceeded expectations.
The main focus of the market is Nvidia's earnings. According to market research firm FactSet, Nvidia is expected to report second-quarter revenue of 46.05 billion dollars and earnings per share (EPS) of 1.01 dollars. Investors are looking to assess Nvidia's ability to sustain its investments in artificial intelligence (AI), as well as the impact of competition between the United States and China, through today's earnings results. Previously, the Donald Trump administration decided to effectively impose a "export tax" of 15% on Nvidia's China sales as a condition for resuming exports of the lower-performance, China-exclusive chip "H20" to China.
Guy Miller, Chief Strategist at Zurich Insurance Group, commented, "With the AI premium having somewhat declined, Nvidia's earnings today will serve as a key indicator of whether the AI story can continue to unfold. The technology cycle-what we call the AI dream-could either persist or contract significantly."
Tom Essaye, founder and president of The Sevens Report, predicted, "If the earnings fall short of expectations, there could be significant volatility, but if there is a positive surprise, the major indices are highly likely to reach new all-time highs."
The Trump administration's attempt to take control of the Fed is also weighing on the market. The previous day, he said, "We will very soon secure a majority on the Fed Board. Once we have the majority, the housing market will turn around and things will be great. We need to lower interest rates a bit." After abruptly dismissing Fed Governor Lisa Cook over allegations of mortgage fraud the previous day, he also expressed his intention to reshape the Fed Board with members favorable to rate cuts. If he nominates a successor to Cook, he would secure at least four rate-cut supporters on the seven-member Fed Board.
This has led to a rise in long-term U.S. Treasury yields, putting pressure on investor sentiment. The yield on the 10-year Treasury note rose by 2 basis points (1bp = 0.01 percentage points) from the previous day to 4.27%, while the 30-year yield climbed 4 basis points to 4.95%. Concerns that undermining the Fed's independence could hinder its ability to tackle inflation, along with declining confidence in the medium- to long-term U.S. economy, are contributing to the rise in long-term yields. The yield on the two-year note, which is sensitive to monetary policy, was moving around 3.65%, unchanged from the previous day.
The dollar, which had declined the previous day, reversed course and strengthened, with the dollar index-which measures the dollar against the currencies of six major countries-rising 0.42% from the previous day to 98.53.
Investors are also paying close attention to the impact of the United States' 50% tariff on India, which took effect at 12:01 a.m. today.
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