[New York Stock Exchange] All Major Indexes Rise on Nvidia Earnings Optimism... S&P Hits Record High

Nvidia's Earnings Test the Durability of AI Investments
Market Remains Calm Amid Trump's Moves to Shake Up the Fed
Long-Term US Treasury Yields Stabilize, Dollar Holds Steady

All three major indexes on the New York Stock Exchange closed higher on August 27 (local time). Investor optimism ahead of Nvidia's earnings announcement provided a boost to the market. Although the White House's attempt to exert control over the Federal Reserve drove up long-term Treasury yields and dampened investor sentiment early in the session, the market shifted to buying as attention turned to Nvidia.

Reuters Yonhap News

On this day, the blue-chip Dow Jones Industrial Average closed at 45,565.23, up 147.16 points (0.32%) from the previous session. The large-cap S&P 500 Index rose 15.46 points (0.24%) to finish at 6,481.4, setting a new all-time high. The tech-heavy Nasdaq Index gained 45.87 points (0.21%) to close at 21,590.14.

The main focus for the market was Nvidia's earnings announcement, scheduled for release after the close. According to market research firm FactSet, Nvidia is expected to report second-quarter revenue of $46.05 billion and earnings per share (EPS) of $1.01. Investors looked to Nvidia's results to gauge the sustainability of artificial intelligence (AI) investments and the impact of US-China competition, in order to anticipate future market trends.

Tom Essaye, founder and president of The Sevens Report, commented on Nvidia's earnings, saying, "If the results fall short of expectations, significant volatility could occur, but if there is a positive surprise, the major indexes are likely to reach new record highs."

Terry Sandven, chief equity strategist at US Bank Asset Management, said, "Nvidia is expected to deliver generally solid results," adding, "Interest rates are on the verge of being cut, corporate earnings are on an upward trend, and recent market momentum supports risk appetite."

With investors' attention focused almost entirely on Nvidia, Donald Trump's attempt to take control of the Federal Reserve Board received relatively less attention in the market. The previous day, he stated, "We will secure a majority on the (Fed Board) very soon," and added, "Once we have a 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, he expressed his intention to restructure the Fed Board with members favorable to rate cuts. If he nominates a successor to Governor Cook, he would secure at least four rate-cut supporters on the seven-member Fed Board.

In response, former US Treasury Secretary Janet Yellen warned in an op-ed for the UK's Financial Times (FT) that the dismissal of Governor Cook was "a direct attempt to politicize the Fed, intimidate its leadership, and manipulate monetary policy according to the president's wishes." She cautioned, "If the market believes the Fed is acting on political orders, every interest rate decision will lose credibility." She also predicted that undermining the Fed's independence could lead to catastrophic outcomes such as high inflation, low growth, and a weak dollar.

However, as the financial markets regained composure, long-term Treasury yields, which had risen earlier in the session, stabilized in the afternoon. The yield on the 10-year US Treasury note fell 2 basis points (1bp=0.01 percentage point) from the previous day to 4.23%, while the 30-year yield remained steady at 4.91%.

The US Dollar Index, which measures the value of the dollar against six major currencies, rose in the morning but was trading at 98.11, unchanged from the previous day, by the close.

By stock, Nvidia fell by less than 0.1%. Apple rose 0.51%. Alphabet, Google's parent company, gained 0.13%. CNBC reported that Google has laid off 35% of its managers who supervised teams of three or fewer over the past year. MongoDB and Okta surged 37.96% and 1.61%, respectively, after reporting better-than-expected earnings.