Weekly Outlook: Dow, Nasdaq, S&P 500 “Nvidia Earnings to Steal the Show This Week”
After Federal Reserve Chair Jerome Powell made a suggestion that interest rate reduction may be coming, U.S. markets rose on Friday.
Reaching 41,175.08, the Dow Jones Industrial Average increased by 462.30 points, or 1.14%. With a 1.47% gain, the Nasdaq Composite closed at 17,877.79, while the S&P 500 witnessed a 1.15% gain, finishing the day at 5,634.61, just below the record highs set last month.
The closing performance on Friday ensured that all three major indexes had a positive week. The S&P 500 increased 1.45%, the Nasdaq gained 1.4%, and the Dow rose about 1.3%.
Following Powell’s statements at Jackson Hole, Wyoming, when he hinted at possible interest rate decreases, the markets saw a spike on Friday morning. He did not, however, go into detail regarding the scope or timing of any upcoming rate reductions.
This week, the core PCE inflation report is scheduled for release on Friday, and the durable goods report for release on Monday. This data is released prior to the hectic time after Labour Day.
JPMorgan economists predict that the core PCE number will rise by 0.12% from month to month. Based on current data from the import price index, PPI, and CPI, this estimate is anticipated to maintain the year-over-year rate at 2.6% for the third consecutive month. Prices would only have increased by 1.6% on an annualised basis during a three-month period.
Economists stated that the Fed’s attention has recently switched to labour market vulnerabilities and that inflation is close enough to target to allow rate cuts to begin in September. “We also projected a 0.1%m/m increase in the headline index.”
Nvidia will reveal its eagerly awaited financial results
With the exception of the two reports on the US economy, investors will be primarily focused on Nvidia’s impending earnings this week.
After the market closes on Wednesday, the chipmaker—regarded as the leader of the continuing AI revolution—will release its fiscal Q2 2025 financial figures.
The market anticipates that NVIDIA Corporation (NASDAQ:NVDA) will release quarterly results ahead of consensus projections, but given investors’ continued scepticism about the sustainability of AI adoption, the company’s forecast will probably be the main topic of discussion.
Additionally, investors will be closely monitoring any updates from management regarding possible postponements in the release of the upcoming Blackwell chip generation. A one-quarter delay has resulted from a chip respin involving the Blackwell tile, as per supply chain checks. This is due to performance concerns.
But according to analysts previously quoted by KeyBanc Capital Markets, this “is not expected to have any impact to near-term results and guidance.”
“We believe modest expectations for Blackwell shipments in FQ3 have been backfilled with higher Hopper bookings,” they stated.
This week, CrowdStrike (NASDAQ:CRWD), HP (NYSE:HPQ), Salesforce (NYSE:CRM), Lululemon Athletica (NASDAQ:LULU), and MongoDB (NASDAQ:MDB) are among the other firms that will release their earnings.
The opinions of analysts about US stocks
Citi: “The S&P 500 is currently circling around our 5600 year-end target and has largely outperformed the mid-July to early August drawdown.” In the medium run, we recommend a risk/reward balance, with the index PE back to 23x trailing. As anticipated, the Q2 results were essentially a “beat and hold.” There was some negative to 2H estimates offset by the Q2 upside.
Deutsche Bank: “With total inflows of nearly $250 billion over this period, inflows to equity funds reached their highest level in a month this week, extending the current streak to 18 consecutive weeks.” Particularly noteworthy are these substantial inflows during a time of generally sluggish seasonality. According to what we’re reading, there is still a significant risk appetite reflected in equities inflows, which suggests that there may occasionally be pullbacks due to late-cycle worries and political escalation on the home or international fronts, but also robust buy-the-dip rallies.”
Jefferies: “After a lull in early August, risky assets are back at record highs. The move in early August was a fade because it was based mostly on technicals and location. By the end of July, the market was extremely long in stocks, so the response to the lower-than-expected jobless data was overblown. We do, however, maintain a medium-term optimistic outlook despite now holding modest risk holdings.”
