S&P 500, Nasdaq Time to Wait Before NVIDIA; Dow Jones Falls Slightly From Highs

The DOW JONES Index fell 0.08% to 41,216, while the S&P 500 Index lost 0.02% to 5,624. The NASDAQ 100 Index fell 0.01% to 19,579.

During regular trading yesterday, Tuesday, the S&P 500 and the tech-heavy Nasdaq managed to add 0.16%, while the Dow Jones added just 0.02%, which was enough to reach new historical maximum for the second day in a row.

All eyes on Wall Street are on NVIDIA, the company best positioned to capitalize on the AI ​​boom. The semiconductor giant’s shares are set to rise 160% in 2024, raising questions about how much more room the stock will have left.

Investors’ focus in the earnings report will be on Blackwell’s new chip delivery schedule and an update on AI demand.

“Many investors have been sitting on the sidelines in recent days, waiting for NVIDIA to release its Q2 FY25 results,” explains Juan J. Fernández-Figares of Link Gestión. “We are convinced that The company will be able, as it has recently, to comfortably beat analyst consensus sales and earnings expectations. It is unclear whether that will be enough for investors.. In principle, this will increase the value of profitability growth and, above all, the expectations of the company’s managers regarding the evolution of demand for everything related to AI. “Investors will also evaluate what the company says about the launch of its new chip (Blackwell) and when this product will begin to impact the company’s sales and results.”

“The behaviour of an important part of Western stock markets in the short term will depend largely on how investors react to all of the above, especially to technology stocks, many of which continue to trade at very high prices that exclude significant future growth from their results,” notes expert Link Gestión.

In the semiconductor sector, Ambarella shares soared 15% at the open after issuing upbeat earnings guidance for its fiscal third quarter. The company expects revenue of $77 million to $81 million, compared with analysts’ expectations of $69 million. The company also beat Wall Street estimates for top-line and bottom-line profit in the second quarter.

In the retail sector, Nordstrom shares were also well received, rising 5.9% in after-hours trading. The company reported adjusted earnings of 96 cents per share, beating the consensus estimate of 71 cents per share. Of course, revenue of $3.89 billion was slightly below the $3.9 billion the market had expected.

Abercrombie & Fitch reported earnings of $2.50 a share early this morning, beating expectations for $2.22. Revenue rose 21% to $1.13 billion, also beating expectations for $1.1 billion.

For the current quarter, Abercrombie expects sales to grow by a low double-digit percentage, better than the 8.9% analysts had expected. It also raises its full-year sales growth forecast from 10% to a 12% to 13% increase, roughly in line with the 12% increase analysts had expected. The company will have one fewer week in fiscal 2024 than in fiscal 2023, which will likely impact its full-year outlook.

However, investors were hoping for more optimism this year, so shares fell 12%.

Foot Locker also fell 7.5% after its earnings report. The company lost an adjusted 5 cents a share on revenue of $1.9 billion. Analysts polled were expecting a loss of 7 cents a share and revenue of $1.89 billion. The company also reiterated its full-year profit outlook.

Also among the market’s negative heroes is PVH, the company behind Tommy Hilfiger and Calvin Klein, among others. The company’s shares fell 7.5% after issuing gloomy third-quarter guidance. PVH estimates adjusted third-quarter earnings of $2.50 per share, while analysts were expecting $3.12 per share. The company also expects revenue to decline 6% to 7% year over year, worse than analysts’ expectations of a 4.6% decline.

Today’s reports are also expected from Salesforce, although, as with NVIDIA, we’ll have to wait until the close of the next session.

In the section macroeconomicThere are few major announcements on this day, other than the usual weekly data on mortgage applications and oil inventories. The main course will arrive this Friday, when the personal consumption expenditure (PCE) price index is releasedthe Fed’s favorite variable for determining its monetary policy.

After Powell’s speech in Jackson Hole last week, the truth is that The market is assessing a 100% probability of a rate cut in September. although rates are split between the largest 25 points (65.5%) and the smallest (34.5%) of 50 points, according to the CME Group’s FedWatch tool.

In fixed income, which is always highly sensitive to monetary policy, the benchmark US 10-year bond offers a yield of 3.823%, while the two-year bond offers a yield of 3.869%.

In the commodity markets, oil prices falling as investors continue to assess the outlook for global demand and the situation in the Middle East. The future Brent Benchmark prices in Europe fell 0.90 percent to $77.95 a barrel, while U.S. West Texas Intermediate futures fell 0.93 percent to $74.83 a barrel.

Today’s rise in the dollar also puts pressure on black gold. The euro-dollar falls by 0.6% against the US dollar, until the exchange rate remains at $1.1115 for each community currency.