Dow futures stabilized on Sunday evening following a significant rally on Wall Street, prompted by dovish remarks from Federal Reserve Chair Jerome Powell, indicating potential interest rate reductions in the near future. This week, attention is directed towards the earnings report of NVIDIA Corporation, a key player in the artificial intelligence sector, as stakeholders seek further insights into this rapidly expanding industry.
Futures increased following a rally on Wall Street on Friday, which mitigated a significant portion of recent losses as investors heightened their expectations that the Fed will reduce interest rates in September. However, technology shares continued to exhibit fragility following a significant selloff throughout the majority of last week, with apprehension surrounding Nvidia anticipated to maintain a subdued atmosphere in the sector. The S&P 500 Futures exhibited stability at 6,483.25 points, whereas the Nasdaq 100 Futures maintained a consistent level at 23,572.0 points as of 19:17 ET (23:17 GMT). Dow Jones Futures remained stable at approximately 45,711.0 points.
Powell, addressing the Jackson Hole Symposium on Friday, indicated that the central bank may consider a rate cut in September due to escalating risks to the labor market. However, the Fed Chair cautioned that the decision was not definitive, particularly given the ongoing risks associated with inflation. Federal Reserve policymakers have consistently highlighted the ambiguity surrounding the inflationary effects stemming from President Donald Trump’s trade tariffs. Powell’s remarks were comparatively dovish in relation to the recent communications from the Fed, leading to an increase in market speculation regarding a potential rate cut in September. Wall Street indexes experienced a significant uptick in response to his remarks, effectively recovering a substantial portion of the declines observed in the previous week. On Friday, the S&P 500 experienced an increase of 1.5%, reaching a level of 6,466.91 points. The NASDAQ Composite experienced an increase of 1.9%, reaching 21,496, while the Dow Jones Industrial Average also rose by 1.9%, achieving a record-high of 45,631.74 points. Fed fund futures prices indicated that markets are now pricing in an 82.9% probability of a 25 basis point rate cut by the Fed in September, an increase from the previous day’s estimate of 73.1%, as reported by CME Fedwatch.
Nvidia is poised for further insights on AI. The primary attention this week is directed towards the second-quarter earnings report from AI leader NVIDIA Corporation, scheduled for release on Wednesday. The company is often viewed as a leading indicator of AI demand and is anticipated to report another robust quarter. However, attention will be directed towards the company’s sales in China, which are expected to have declined further due to temporary U.S. export restrictions and heightened scrutiny from Chinese authorities regarding AI chips. Nvidia was observed ceasing production of its China-specific H20 chip last week. Nvidia’s earnings arrive in the context of a prolonged decline in technology stocks, as investors scrutinize the sustainability of profitability within the AI sector in the forthcoming quarters. In addition to Nvidia, Dell Technologies Inc, Dick’s Sporting Goods Inc, Best Buy Co Inc, Dollar General Corporation, and Abercrombie & Fitch Company are scheduled to announce their earnings this week. This week, we anticipate the release of second-quarter gross domestic product data, following preliminary figures from late July that indicated robust growth.