US stocks were indicated mixed in Monday trading, following Friday’s surge stemming from the central bank’s clear indication that it would cut interest rates.
Investors cheered the central bank’s signaling on interest rates but are wary of the Middle East situation, where Israel and the terrorist group Hezbollah traded attacks over the weekend. Bloomberg reported that oil prices were higher as a result.
Specifically on the stock front, investors will focus this week on the approaching fiscal-second-quarter report from artificial-intelligence-chip maker Nvidia, scheduled for after the market close on Wednesday.
At last check futures on the Dow Jones Industrial Average indicated an 11-point rise. The S&P 500 was indicated 2.4 points higher and the Nasdaq Composite was seen dropping 22 points.
Fed Chairman Jerome Powell sees inflation on track toward the central bank’s 2% target. (Tom Williams/CQ-Roll Call, Inc via Getty Images)
On Friday the S&P 500 finished 1.15% higher, putting it within 1% of its record. Investors reacted to Fed Chairman Jerome Powell’s assertion that inflation is on a path toward the central bank’s 2% target and that “the time has come” for interest rate policy to adjust accordingly.
Speaking at the Fed’s annual convention in Jackson Hole, Wyo., Powell said that the labor market has cooled down considerably and that the balance of its two-sided mandate, full employment and low inflation, has shifted to the jobs side.
Related: Nvidia’s Jensen Huang and new inflation data may rock the markets
“Powell’s Jackson Hole speech was largely priced into the bond market, which is why yields stayed in place following his dovish comments,” said Richard Saperstein, chief investment officer, Treasury Partners.
“This next regime of lower interest rates provides fuel for equities to move higher. The relationship between stocks and bond yields is important, especially during this Federal Reserve policy transition,” he added.
On Friday the Commerce Department’s Bureau of Economic Analysis will report the Fed’s favorite inflation measure, the Personal Consumption Expenditures Price Index. It measures the changes in prices of the goods and services that consumers buy and use. TheStreet’s Charley Blaine reported that as of Sunday at midday the consensus estimate was for a 2.4% rise.
Nvidia (NVDA) is expected to report earnings more than doubled to 64 cents a share from 25 cents in the year-earlier quarter. Revenue is estimated to have doubled as well, to $28.6 billion.
“Nvidia is clearly an important market component and each earnings release will be a cliffhanger,” Saperstein said. “The bar remains high for Nvidia to demonstrate that AI spending is continuing at a torrent pace.”
Other companies to watch this week include CrowdStrike, (CRWD) which also is reporting for its Q2 on Wednesday. The company is managing the damage last month when it sent out an update that caused computer app outages worldwide.
And other critical companies reporting include department-store retailer Nordstrom (JWN) on Tuesday, customer-relations-management-software giant Salesforce (CRM) on Wednesday, and computer hardware giant Dell Technologies (DELL) and chip stalwart Marvell (MRVL) on Thursday.
“Investors should maintain exposure to large cap technology stocks, which benefit from significant and growing recurring revenues, AI tailwinds as well as a haven from macro volatility,” Saperstein said. “The August selloff provided an opportunity to establish or increase exposure.”
