Nvidia's impressive revenue forecast of $108 billion (plus or minus 2%) for the current period, surpassing the average analyst estimate of $105.2 billion, propelled Nasdaq futures higher and contributed to gains in Asian equities. While some projections had anticipated even higher figures exceeding $110 billion, the company's outlook was still seen as positive by many investors.
The positive sentiment around Nvidia was particularly notable as it followed a recent period where the AI trade had faced scrutiny, with investors questioning the potential returns on significant AI investments. Nvidia's anticipated revenue nearly doubled from the previous year, significantly outperforming rivals.
Despite the boost from Nvidia, the broader market remained cautious. Short-dated Treasuries underperformed, and money markets fully priced in a Federal Reserve rate hike by December. Inflation concerns persisted, with the core personal consumption expenditures price index advancing 3.3% year-over-year in July, remaining above the Fed's target. The S&P 500 and Nasdaq 100 showed little change in late trading, while the Dow Jones Industrial Average fell 0.2%.
Economic data also showed the US economy expanding at an unrevised 1.5% pace in the second quarter, although consumer spending and business investment were stronger than initially reported. Analysts, like Ellen Zentner from Morgan Stanley Wealth Management, noted that while the data might not immediately shift the September Fed meeting, sustained trends could pressure policymakers to consider further rate increases. All eyes are now on Fed Chair Kevin Warsh's Jackson Hole speech for further guidance on monetary policy.
Commodity markets 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. Treasury yields also advanced, with the 10-year yield increasing two basis points to 4.65%.
