Wall Street traders saw stocks waver in late hours following Nvidia Corp.'s earnings report, with caution dominating as bond prices fell due to expectations of a Federal Reserve rate hike this year. An exchange-traded fund tracking the S&P 500, valued at $809 billion, fluctuated after regular trading hours. Nvidia Corp. experienced a decline after its sales forecast, which, while above analyst estimates at $108 billion (plus or minus 2%) compared to the $105.2 billion average, underwhelmed some investors who had projected figures exceeding $110 billion.
Short-dated Treasuries underperformed, and money markets have fully priced in a rate hike by December. A key inflation measure, the core personal consumption expenditures price index excluding food and energy, matched estimates by advancing 3.3% year-over-year in July, remaining well above the Fed’s target. This data, coupled with the U.S. economy expanding at an unrevised 1.5% pace in the second quarter (though with stronger underlying consumer spending and business investment), led investors to be sensitive to any information that might increase the likelihood of higher interest rates.
Bret Kenwell at eToro highlighted that inflation remains too high, and market participants will be closely watching Fed Chair Kevin Warsh’s upcoming Jackson Hole speech for insights into how policymakers plan to address it. Meanwhile, Jeff Roach at LPL Financial noted that an inflection point might be approaching, but consumers are still benefiting from income growth that surpasses inflation. The S&P 500 and Nasdaq 100 were little changed, while the Dow Jones Industrial Average fell 0.2%. The yield on 10-year Treasuries advanced two basis points to 4.65%, and West Texas Intermediate crude fell 0.5% to $81.92 a barrel, with spot gold declining 1.4% to $4,594.14 an ounce.
