Stocks fluctuate in weak trading ahead of Nvidia reports: Markets Wrap

(Bloomberg) — Stocks were lower as investors waited to make decisions ahead of Nvidia Corp. earnings and U.S. inflation data later in the week.

Most read by Bloomberg

U.S. stock futures rose slightly. Europe's Stoxx 600 index added 0.3 percent, with mining stocks leading the gains. Trading volumes were light, with activity in most European benchmarks about half the average over the past 30 days. Treasuries and the dollar also remained steady.

There is a lot at stake ahead of Nvidia's report on Wednesday, especially after an earnings season that saw disappointing results for other Magnificent Seven megacaps. Investors will also be watching U.S. economic growth and inflation data later in the week. In Asia, further signs of a slowdown in China weighed on investor sentiment.

Nvidia's “numbers will be good, but what matters is the forecast to understand if demand is still healthy,” said Alberto Tocchio, portfolio manager at Kairos Partners. “If we get bad news, the rotation will be even stronger because the market is still very much based on mega-caps.”

Nvidia's weight, which has the second-largest weight in the S&P 500 after Apple Inc., and its high valuation mean the company is vulnerable to big swings that could have far-reaching implications. Pricing in the options market shows traders see the potential for a move of nearly 10% in either direction after the earnings release, which would equate to a rise of about 160 points in the Nasdaq 100 Index, or a move of 0.8%, according to data compiled by Bloomberg.

Read: What a September rate cut could mean for the economy and the election

Among individual stocks in premarket U.S. trading, Paramount Global fell after CBS parent company announced it would proceed with asset disposals. Nvidia shares rose slightly.

In Europe, shares in Associated British Foods Plc fell after Deutsche Bank downgraded its rating on the stock to “sell” from “hold.” Ryanair Plc led gains among European airline and travel stocks after CEO Michael O'Leary said a slowdown in prices seen between April and June had now stabilized. Shares in Bunzl Plc rose sharply after the distribution group raised its full-year profit forecast.

Meanwhile, Mary Daly, president of the Fed Bank of San Francisco, said it was appropriate to start cutting interest rates, while her counterpart Thomas Barkin of Richmond said he still saw upside risks to inflation but supported a “lowering” of interest rates.

The story continues

Economists expect the personal consumption expenditures price index (excluding food and energy) – the Fed's preferred measure of underlying inflation – to rise 0.2 percent in July for the second straight month, bringing the three-month annualized core inflation rate down to 2.1 percent, slightly above the central bank's 2 percent target.

“Powell sealed the deal for a September cut at Jackson Hole – leaving our thesis of continued expansion/rotation intact,” said Ohsung Kwon of Bank of America Corp. “But Nvidia's earnings should not be underestimated, as they are a consistent driver of S&P returns and still pose a risk to markets in the event of disappointment.”

Important events this week:

• US Conference Board Consumer Confidence, Tuesday

• Nvidia results, Wednesday

• Fed President Raphael Bostic and Fed Chairman Christopher Waller will speak on Wednesday

• Consumer confidence in the Eurozone, Thursday

• US GDP, initial jobless claims, Thursday

• Fed President Raphael Bostic speaks on Thursday

• Unemployment in Japan, CPI Tokyo, industrial production, retail sales, Friday

• CPI and unemployment in the Eurozone, Friday

• Personal income, spending, PCE in the US; consumer sentiment, Friday

Some of the key market movements:

Shares

• The Stoxx Europe 600 rose 0.3% at 10:03 a.m. London time

• S&P 500 futures remained little changed

• Nasdaq-100 futures rose 0.1 percent

• Futures on the Dow Jones Industrial Average remained little changed

• The MSCI Asia Pacific Index fell 0.2 percent

• The MSCI Emerging Markets Index fell 0.3%

Currencies

• The Bloomberg Dollar Spot Index remained little changed

• The euro was little changed at 1.1171 USD.

• The Japanese yen fell 0.3% to 144.97 per dollar

• The offshore yuan remained virtually unchanged at 7.1299 per dollar.

• The British pound rose 0.3% to $1.3225.

Cryptocurrencies

• Bitcoin fell 1% to $62,790.52

• Ether fell 0.2% to $2,684.29

Bonds

• The yield on 10-year government bonds rose two basis points to 3.83%

• The yield on German 10-year bonds rose by two basis points to 2.27 percent

• The yield on British 10-year bonds rose eight basis points to 3.99 percent

Raw materials

• The price of Brent oil fell 0.5 percent to $81.03 per barrel.

• The spot price of gold fell 0.3 percent to $2,511.28 an ounce.

This story was created with the assistance of Bloomberg Automation.

Most read by Bloomberg Businessweek

©2024 Bloomberg L.P.