Wall Street experienced wavering stock performance after Nvidia Corp.'s earnings announcement, with a prevailing sense of caution as bond yields rose on expectations of a Federal Reserve rate hike later this year. The S&P 500 exchange-traded fund fluctuated post-market, and Nvidia's shares declined due to a sales forecast that underwhelmed some investors. The company projected revenue of $108 billion, plus or minus 2%, for the current period, exceeding the average analyst estimate of $105.2 billion but falling short of some higher projections that had surpassed $110 billion.
Money markets are now fully pricing in a rate hike by December. This sentiment was reinforced by a key inflation gauge, the core personal consumption expenditures price index, which advanced 3.3% in July from a year earlier, remaining above the Fed's target. Despite the US economy growing at an unrevised 1.5% in the second quarter, underlying details indicated stronger consumer spending and business investment than initially reported, adding to concerns about inflation.
Analysts like Ellen Zentner from Morgan Stanley Wealth Management noted that the latest economic data was not what investors desired, given their sensitivity to factors that could increase the likelihood of higher interest rates. Bret Kenwell of eToro highlighted the challenge of persistent inflation, with investors keenly awaiting Fed Chair Kevin Warsh's speech at Jackson Hole for clues on how policymakers plan to address it. Jeff Roach at LPL Financial suggested that while an inflection point might be near, consumers are still benefiting from income growth outpacing inflation, and easing geopolitical tensions could see core inflation drop below 3%, offering optimism for investors.
In broader market movements, the S&P 500 and Nasdaq 100 were little changed at market close, while the Dow Jones Industrial Average fell 0.2%. The Bloomberg Dollar Spot Index rose by 0.2%. In the bond market, the yield on 10-year Treasuries advanced two basis points to 4.65%. Commodities saw West Texas Intermediate crude fall 0.5% to $81.92 a barrel, and spot gold dropped 1.4% to $4,594.14 an ounce. Cryptocurrencies showed modest gains, with Bitcoin rising 0.4% to $78,497.57 and Ether increasing 1.5% to $2,472.87.
