Major U.S. stock indexes traded mixed Wednesday as investors stayed on the sidelines ahead of Nvidia's fiscal second-quarter earnings, due after the close. A hotter-than-expected inflation reading also lifted the odds of a September Federal Reserve rate hike.
Indexes Wobble Before Nvidia's Report
The Dow Jones Industrial Average lost 0.2% Wednesday morning, while the S&P 500 edged 0.1% lower and the Nasdaq composite gave back around 0.4%. Small caps bucked the trend, with the Russell 2000 inching up 0.1%.
By mid-morning the picture had shifted: at 9:53 a.m. ET, the Dow fell 21.54 points, or 0.04%, to 53,555.86, while the S&P 500 gained 2.24 points, or 0.03%, to 7,679.52, and the Nasdaq Composite lost 13.85 points, or 0.06%, to 26,137.16. Information technology and industrials led the S&P 500, rising 0.3% and 1% respectively, as Microsoft and Apple each added 0.5%.
Hot Inflation Print Boosts Rate-Hike Bets
The Commerce Department's preliminary reading for second-quarter GDP came in at 1.5%, unchanged from the previous estimate. The Fed's favored inflation gauge, the core PCE price index, rose 0.2% in July for an annual increase of 3.3%, matching estimates.
A separate Commerce Department report showed annual U.S. inflation increased 3.7% in the 12 months through July, just above the 3.6% expected by analysts. Fed funds futures now show about a 44% chance of a September rate increase, up from roughly 36% just before the data release, keeping rate hike bets in focus. Jeff Buchbinder, chief equity strategist at LPL Financial, said the market remains "a tug of war between earnings and interest rates", according to Reuters.
Nvidia Awaits Its Turn
Nvidia stock edged lower premarket, building on a 2.2% rebound Tuesday that snapped a seven-day losing streak. With a market capitalization of $5.16 trillion, the chipmaker's results are closely watched as a barometer for the broader AI trend.
Analysts polled by FactSet expect Nvidia to report adjusted earnings of $2.09 a share on sales of $92.27 billion for the quarter ended July 26, up from $1.05 a share on $46.74 billion a year earlier. Anything short of a strong report could revive doubts about the durability of the AI boom and set the tone for tech stocks the rest of the week, according to Reuters.
Sources: Investor's Business Daily, Investor's Business Daily, Reuters via Investing.com
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