Stocks generally rose as declining oil prices led to lower bond yields, with markets anticipating Nvidia Corp.'s earnings report for insights into the artificial intelligence sector. The Nasdaq 100 outperformed, and a rebound in chipmakers halted a seven-day losing streak for Nvidia. Brent crude settled below $90 due to hopes for renewed energy flows through the Strait of Hormuz and easing concerns about Middle East geopolitical tensions, which also reduced inflationary worries and boosted Treasuries. The S&P 500 increased by 0.3%, the Nasdaq 100 by 0.6%, and the Dow Jones Industrial Average by 0.3%. Bitcoin was little changed at $78,922.95.
Analysts are keenly focused on Nvidia's earnings, with estimates suggesting revenue nearly doubled last quarter to $92 billion, surpassing many rivals' annual figures. Mark Malek of Siebert Financial noted that Nvidia is "operating on all cylinders" and that good news is widely expected. However, he cautioned that any misstep could present a challenge but also an opportunity for investors. Kenny Polcari of SlateStone Wealth emphasized that investors are looking for confirmation of strong AI demand, sustained hyperscaler spending, healthy margins, and guidance that justifies ongoing massive investments.
Lower oil prices, including a 4.6% drop in West Texas Intermediate crude to $81.08 a barrel, eased inflation concerns and contributed to a rally in government bonds. The yield on 10-year Treasuries declined seven basis points to 4.63%. Germany’s 10-year yield fell five basis points to 3.20%, and Britain’s 10-year yield dropped seven basis points to 4.99%. Spot gold also rose 0.3% to $4,666.70 an ounce.
Markets are also looking to a speech by Fed Chair Kevin Warsh on Friday for further direction, especially after a July press conference unsettled trading. Matt Maley of Miller Tabak believes Warsh is likely to "stick to his guns," making Nvidia's positive earnings reaction crucial given the mixed performance of other chip stocks this season. The easing of geopolitical risks and subsequent drop in oil prices have helped offset market trepidation, despite the looming "event risk" of Nvidia's results and Warsh's speech. Charu Chanana at Saxo Markets highlighted that investors are not just asking if Nvidia can deliver strong results, but if the upside is enough to justify high expectations, particularly with elevated bond yields.
