Wall Street traders observed fluctuating stock prices after Nvidia Corp.'s earnings report, with caution prevailing as bonds fell due to expectations of a Federal Reserve rate hike this year. An $809 billion exchange-traded fund tracking the S&P 500 showed volatility post-trading hours, while Nvidia Corp. experienced a dip after its sales forecast left some investors underwhelmed. Short-dated Treasuries underperformed, and money markets fully priced in a rate hike by December, despite a key inflation gauge matching estimates but still exceeding the Fed's target.
Nvidia announced revenue in the current period to be $108 billion, plus or minus 2%. This figure surpassed the average analyst estimate of $105.2 billion, though some projections had reached over $110 billion. According to Ellen Zentner at Morgan Stanley Wealth Management, investors remained sensitive to any factors that could increase the likelihood of higher interest rates, and the latest economic data did not align with their preferences. While the data wasn't enough to sway the September Fed meeting, Zentner noted that consistent future figures pointing in the same direction could pressure policymakers to act.
The core personal consumption expenditures price index, excluding food and energy, increased by 3.3% year-over-year in July. Additionally, the US economy expanded at an unrevised 1.5% pace in the second quarter, with stronger consumer spending and business investment than initially reported. Bret Kenwell at eToro highlighted that inflation remains uncomfortably high, and investors will be looking to Fed Chair Kevin Warsh's Jackson Hole speech for insights into how policymakers plan to address it. Jeff Roach at LPL Financial suggested that while an inflection point might be nearing, consumers are still benefiting from income growth outpacing inflation. He added that for policymakers, inflation continues to be the primary risk, and easing geopolitical tensions could potentially lead to core inflation falling below 3%, offering optimism for investors.
The S&P 500 and Nasdaq 100 showed little change, while the Dow Jones Industrial Average decreased by 0.2%. The MSCI World Index also remained largely unchanged. In currency markets, the yield on 10-year Treasuries increased by two basis points to 4.65%. Germany's 10-year yield advanced three basis points to 3.23%, and Britain's 10-year yield rose four basis points to 5.03%. In commodities, West Texas Intermediate crude fell by 0.5% to $81.92 a barrel, and spot gold dropped by 1.4% to $4,594.14 an ounce.
