Stocks struggled to find solid footing after a technical rally in big tech, with traders bracing for Nvidia Corp.’s results — which are set to test Wall Street’s fervor around the artificial-intelligence hype.
(Bloomberg) — Stocks struggled to find solid footing after a technical rally in big tech, with traders bracing for Nvidia Corp.’s results — which are set to test Wall Street’s fervor around the artificial-intelligence hype.
The S&P 500 was little changed. Banks led losses after S&P Global Ratings joined Moody’s Investors Service in cutting some US lenders amid a “tough” climate. Tesla Inc. extended a two-day jump to almost 10%. Nvidia saw a lot of volatility on the eve of its quarterly report, wiping out gains after touching an all-time high. The chipmaker’s earnings are seen by many traders as setting the tone for markets alongside Jerome Powell’s speech on Friday.
In a sign of how significant Nvidia’s results will be, the options market is bracing for a move of about 10% following the results. With Nvidia accounting for over 3% of the S&P 500, the stock action will possibly have broader implications. Of the 10 largest companies in the gauge, Nvidia is the only stock for which the prices of call options — which are desirable if the stock goes up — are higher than put options, according to data from Nations Indexes.
The recent rally in megacaps gave tech bulls some reasons to be encouraged about how the group will act into the seasonally challenging September/October timeframe, but it also put a lot of pressure on Nvidia to come through with an exceptional earnings report, said Matt Maley at Miller Tabak + Co.
“The expectations are getting extremely high, Maley noted. “This does not mean that their earnings report will not be the catalyst for a nice push higher for the tech stocks once again, but the higher the expectations get, the tougher they become to be exceeded. With the continued rise in bond yields, it is going to be essential for Nvidia to report spectacular earnings and guidance again if this correction in the tech sector is going to come to an end any time soon.”
Action in the Treasury market subsided on Tuesday, with yields on 10-year bonds roughly flat.
Bank of America Corp. clients funneled $4.4 billion into US equities last week — the largest allocation in two months — with purchases led by institutional investors and hedge funds. Meantime, Citigroup Inc. strategists noted that bullish positioning in S&P 500 futures declined.
- Activision Blizzard Inc. rose as Microsoft Corp.’s $69 billion acquisition offer got a new chance at winning approval from UK regulators after the tech giant submitted a substantially different deal to the country’s antitrust watchdog.
- Lowe’s Cos. climbed after topping Wall Street estimates for quarterly profit and comparable sales, easing fears of a meltdown in home improvement.
- Macy’s Inc. slipped after providing weaker-than-expected sales and profit projections for the current quarter. The department-store operator also reported a drop in net credit card revenue year over year, driven by an increased rate of delinquencies.
- Dick’s Sporting Goods Inc. sank after cutting its profit outlook for the full year as the retailer deals with slowing growth and more theft at its stores.
- The selloff in AMC Entertainment Holdings Inc., sparked by a Delaware Supreme Court ruling that the company’s stock conversion can go forward, extended into a second day.
Key events this week:
- Eurozone S&P Global Services & Manufacturing PMI, consumer confidence, Wednesday
- UK S&P Global / CIPS UK Manufacturing PMI, Wednesday
- US new home sales, S&P Global Manufacturing PMI, Wednesday
- US initial jobless claims, durable goods, Thursday
- Kansas City Fed’s annual economic policy symposium in Jackson Hole begins, Thursday
- Japan Tokyo CPI, Friday
- US University of Michigan consumer sentiment, Friday
- Fed Chair Jerome Powell, ECB President Christine Lagarde to address Jackson Hole conference, Friday
Some of the main moves in markets:
- The S&P 500 was little changed as of 11:25 a.m. New York time
- The Nasdaq 100 rose 0.3%
- The Dow Jones Industrial Average fell 0.3%
- The Stoxx Europe 600 rose 0.7%
- The MSCI World index rose 0.2%
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.4% to $1.0852
- The British pound fell 0.2% to $1.2734
- The Japanese yen rose 0.3% to 145.81 per dollar
- Bitcoin fell 0.4% to $26,001.25
- Ether fell 0.9% to $1,656.72
- The yield on 10-year Treasuries was little changed at 4.33%
- Germany’s 10-year yield declined five basis points to 2.66%
- Britain’s 10-year yield declined seven basis points to 4.66%
- West Texas Intermediate crude was little changed
- Gold futures rose 0.1% to $1,925.50 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Brett Miller, Tassia Sipahutar, John Viljoen, Namitha Jagadeesh, Farah Elbahrawy, Elena Popina and Vildana Hajric.
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