On the 25th (local time), major indexes on the New York stock market all closed higher. As international oil prices fell, bond yields were pulled down, and money exiting the bond market flowed broadly into stocks, lifting the indexes. A tech-led buying spree ahead of Nvidia's earnings release, due the next day, also buoyed the market.
On the New York Stock Exchange (NYSE), the blue chip–heavy Dow Jones Industrial Average finished at 53,577.35, up 160.19 points, or 0.30%, from the previous session. The large-cap–oriented Standard & Poor's (S&P) 500 rose 24.36 points, or 0.32%, to 7,677.22. The tech-heavy Nasdaq composite jumped 171.11 points, or 0.66%, to close at 26,151.30. The small- and mid-cap–focused RUSSELL index also gained 10.89 points, or 0.36%, to 3,005.97, showing broad-based strength across the market. The CBOE Volatility Index (VIX), known as Wall Street's fear gauge, fell 2.46% to 15.46, suggesting improving investor sentiment.
The U.S. 10-year Government Bonds yield, the global benchmark for market rates, fell 7 basis points from the previous session to around 4.63% (1 bp = 0.01 percentage point). When Government Bonds yields decline, corporations pay less interest expense when borrowing for their businesses. In particular, lower rates can be a strong tailwind for stock prices of technology corporations that require massive investment capital.
On the day, the U.S. Treasury's reported consideration of using the $1 trillion Treasury General Account (TGA) to ramp up bond purchases to stabilize long-dated Government Bonds yields spurred the decline in yields. Treasury Secretary Scott Bessent reassured markets by saying the government would at least double the size of its Government Bonds purchases.
Falling international oil prices also eased inflation concerns and helped push down Government Bonds yields. Brent, the global benchmark, fell 3.9% to settle at $88.58 a barrel, while West Texas Intermediate (WTI) tumbled 4.6% to $81.08 a barrel.
The U.S. government said it would return diplomats to its embassies in the Middle East. In addition, news that Iran and Oman are discussing opening a temporary joint shipping corridor to resume energy shipments through the Strait of Hormuz also contributed to lower oil prices. Washington's announcement of tough economic sanctions cutting Iran's access to the global dollar financial network, shifting strategy from military confrontation to economic pressure, also calmed market jitters.
Investor attention is fixed on Nvidia's earnings, scheduled for release after the close on the 26th. Nvidia virtually monopolizes the market for graphics processing units (GPUs), which are essential for AI computation. Nvidia shares rose about 2% on the day, snapping a seven-session losing streak. Other chip-related stocks, including AMD (4%) and Micron Technology (2%), also climbed, reflecting rising expectations.
Wall Street analysts estimate Nvidia's last-quarter revenue nearly doubled year over year to $92 billion. It is an enormous sum, equivalent to a rival's annual revenue earned in just one quarter. Mark Malek, a specialist at Siebert Financial, said, "Nvidia is currently firing on all cylinders and moving in the right direction," adding, "Everyone expects good news, but even a very small mistake or misjudgment could pose a major challenge for the market."
Meanwhile, news that OpenAI, the developer of ChatGPT, saw its in-house Jalapeno chip outperform Nvidia's flagship lineup in testing signaled even fiercer competition ahead in the AI Semiconductor market.
However, as U.S. consumer sentiment weakened and trade tensions flared between the United States and Canada, gains were capped, especially in consumer stocks. The Conference Board's consumer confidence index for Aug. came in at 89.4, missing the market forecast of 90.2 and falling to its lowest level this year. The reading reflects a softer labor market and more consumers taking a pessimistic view of economic conditions six months ahead.
Amid mounting concerns over slowing consumption, retail corporations underperformed. Dick's Sporting Goods, the largest sporting goods retailer in the United States, posted quarterly results that missed expectations and cut its annual outlook, sending its shares plunging more than 29% intraday. Shares of major big-box retailers Walmart (-1%) and Target (-4%) also fell.
Escalating trade tensions between the United States and Canada also weighed on stocks. The Canadian government said it would impose retaliatory tariffs of 15% to as high as 50% on more than 700 U.S. products, including steel, aluminum, and dairy, starting on the 8th of next month, in response to the 50% tariff the U.S. president levied on Canadian imports over the weekend.
Stock investors are watching the Jackson Hole meeting, which opens on the 27th in the Wyoming resort town. The Jackson Hole meeting brings together Central Bank chiefs and economists from around the world to discuss the future path of currency policy. Investors are on edge over what remarks Federal Reserve Chair Kevin Warsh will deliver in his speech on the 28th.
Meanwhile, with a weaker dollar and funds flowing to alternative assets as a hedge against rising government liability, flagship cryptocurrency Bitcoin surged more than 3%, poised to break above the $80,000 mark. Spot gold also rose 0.6% to $4,677.19 an ounce, hitting a three-month record high. Global investment bank UBS projected that the downtrend in bond yields will continue over the long term and advised, "Maintain equity exposure on the back of solid corporations earnings, and include some gold in portfolios for defense."