On the 26th, the three major New York stock indexes paused for breath and ended mixed. With Nvidia's earnings due after the close, investors held back from hasty trades. On top of that, with U.S. inflation stubbornly high, the possibility of a Central Bank rate hike reemerged.
On the New York Stock Exchange, the Dow Jones Industrial Average fell 113.52 points, or 0.21%, to finish at 53,463.88. The large-cap S&P 500 slipped 1.58 points, or 0.02%, to 7,675.70. The tech-heavy Nasdaq composite also eased 21.10 points, or 0.08%, to 26,130.20, ending slightly lower.
Investor focus was squarely on Nvidia's report card due after the close. Nvidia is a company big enough to steer the entire stock market tied to artificial intelligence (AI). As investors kept their wallets shut until they could see the results firsthand, Nvidia shares fell 1.6% in regular trading.
Ulrike Hoffmann-Burghardi, chief investment officer at UBS, warned that Nvidia's results could sharply increase stock market volatility. She said, "Investors want solid earnings that beat market expectations and a view that future demand for AI chips will remain robust." Jack Ablin at Cresset Capital Management also noted, "To meet market expectations, Nvidia needs to clearly demonstrate margin strength and demand durability."
The core personal consumption expenditures price index for July, released by the U.S. government that day, rose 3.3% from a year earlier. It was up 0.2% from a month earlier. The gauge shows U.S. inflation excluding the more volatile food and energy categories. The Federal Reserve is known to weigh this figure most heavily when setting future currency policy. While last month's increase matched market expectations, experts noted it remains elevated versus the Fed's long-term target.
Ellen Zentner, chief economic strategist at Morgan Stanley asset management, said the inflation report was not what the market or the Fed had hoped for. She said, "The Fed is unlikely to raise the policy rate at next month's meeting, but if inflation persists, the Fed will inevitably face pressure to hike." Brett Kenwell at eToro noted, "Inflation is still at an uncomfortably high level."
Investors are watching the Jackson Hole Economic Symposium on the 28th in Jackson Hole, Wyo. At the gathering of major Central Bank chiefs and economists, Fed Chair Kevin Warsh is scheduled to deliver the keynote. Investors are hoping Warsh will lay out a concrete plan to pull stubborn inflation down to the long-term target. The bond market also reacted sensitively to rate hike concerns. The 10-year U.S. Government Bonds yield inched up to 4.65% that day.
Some also cited geopolitical tensions and trade conflicts as factors adding to market uncertainty. Iran and Oman agreed to share revenue from vessel transits through the Strait of Hormuz. Concerns then grew that crude shipping expense in the Middle East could rise, but worries about supply disruptions eased somewhat after the U.S. government leaned toward economic sanctions rather than military strikes against Iran. As a result, West Texas Intermediate fell 0.7% to $81.74 a barrel.
Major corporations' shares were mixed. Meta, which runs Facebook and Instagram, rose 1% after agreeing to pay up to $18 billion to settle multiple lawsuits tied to concerns about harm to teenagers. SolarEdge Technologies, a solar corporations, jumped nearly 7% after an upgrade from a financial firm.
By contrast, Zoom Communications, a videoconferencing service, fell 4% after issuing a third-quarter outlook that fell short of investor expectations. Global sports brand Nike dropped more than 2% after its rating was cut following weak results at Dick's Sporting Goods. Nike shares sank to their lowest level in 12 years. Department store chain Kohl's also fell 5% in premarket transaction after reporting a decline in same-store sales for the quarter.