The futures market is in the green today following a mixed day of trading yesterday and ahead of a much-watched earnings report from NVIDIA Corp. (NVDA), a maker of high-end graphics cards that can be utilized for artificial intelligence. This earnings report and outlook will be closely scrutinized by traders, given the stock price has tripled year-to-date to a market cap well eclipsing one trillion dollars, and is now the fifth biggest component in the S&P 500. Additionally, the S&P flash U.S. Services and Manufacturing Purchasing Managers’ Indices, and a government report on new home sales will be released after the market opens and inflation-related data may impact today’s trading.
The stock market fell yesterday after several large retailers reported weaker-than-expected results and outlooks. These included higher credit losses and weakening profit margins, partially caused by greater shrink (shoplifting). What’s more, those retailers said that future economic activity may well be hampered by the restarting of student loan payments, which will take discretionary money out of the hands of consumers. Stocks trended lower through the day and ended near their lows. Overall, the S&P 500 fell 12 points (down 0.28%), and the Dow Jones Industrial Average declined 175 points (down 0.51%). On the other hand, the NASDAQ eked out a slight gain of 8 points (up 0.06%). Market breadth was negative, as decliners outpaced advancers by a 1.4-to-1.0 ratio. REITs and utilities stocks were among the best performers, boosted by a reduction in long-term interest rates. On the other hand, financials were among the weakest, hurt by increased concerns about future loan losses.
In commodity news, oil prices fell alongside the broader market yesterday despite a small draw in crude oil inventories. Meantime, U.S. Treasury bond yields were mixed, with short-term rates rising and long-term ones falling. Still, the yield curve remains sharply inverted, with short-term rates well above long-term ones. Additionally, traders are pricing in a small possibility of a further increase in interest rates at the Federal Reserve meeting in September. The Chicago Board Options Exchange Volatility Index, or VIX, more commonly known as the fear index, fell slightly yesterday despite a fall in equity prices.
Several economic reports will be released in the days ahead. These include initial jobless claims and durable goods orders on Thursday, while the University of Michigan’s Final Consumer Sentiment Index for August will be released Friday. The annual Jackson Hole meeting will start on Thursday, a world-renowned economic conference, and many regional Fed presidents will give remarks on the economy. Notably, Fed Chairman Powell will give a speech on Friday, which should provide further insight into the central bank’s thinking about interest-rate policy. In past years, similar addresses have driven significant changes in trader sentiment. Elsewhere, several dozen mostly smaller companies will report quarterly results in the days ahead. Overall, most eyes will be on Jackson Hole later this week. - John E. Seibert III
At the time of this article’s writing, the author did not hold positions in any of the companies mentioned.
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