Waiting anxiously for NVIDIA results

The past few weeks in particular have featured falling interest rates, rising stock prices, and a weakening dollar. Each has been connected to a prevailing view that the Fed will soon be cutting rates and that the U.S. economy will avoid a hard landing.

It is an effective certainty now that the Fed will be cutting rates. Fed Chair Powell cheered the masses on Friday with an acknowledgment in his speech at Jackson Hole that, “The time has come for policy to adjust.” The jury is still out on whether the economy can avoid a hard landing, but the evidence available remains on the soft landing side.

That understanding has kept selling efforts in check and buyers interested in taking advantage of dips in stock prices. The major indices are entering this week trading near all-time highs.

There isn't much movement in the equity futures market this morning, notwithstanding a weekend that featured retaliatory strikes between Israel and Hezbollah. WTI crude futures are up 2.9% to $77.00/bbl.

Currently, the S&P 500 futures are up nine points and are trading 0.1% above fair value, the Nasdaq 100 futures are down 20 points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are up 78 points and are trading 0.2% above fair value.

The lack of conviction in the futures market can be attributed in part to some tiredness after a busy, and anxious, week leading up to Fed Chair Powell's speech on Friday. Other factors include a relative lack of news this morning, some consolidation interest after the market's big run of late, and some hesitation in front of NVIDIA's (NVDA) earnings report after Wednesday's close.

The latter is the focal point of the week given how much energy is tied up in the AI momentum trade and derivative plays.

Another closely-watched item will be Friday's release of the July Personal Income and Spending Report. It is a Q3 data point that will lend insight on spending activity that is key to GDP growth, as well as insight on inflation trends for the Fed's preferred inflation gauge.

The lone economic release this morning was the July Durable Goods Orders Report.

Total new orders for durable goods surged 9.9% month-over-month in July (Briefing.com consensus 4.0%) following a downwardly revised 6.9% decline (from -6.6%) in June. That surge, like the downturn in June, was driven by transportation equipment orders, which soared 34.8%. Excluding transportation, durable goods orders declined 0.2% month-over-month (Briefing.com consensus 0.1%) following a downwardly revised 0.1% increase (from 0.5%) in June.

The key takeaway from the report is that business spending was soft in July, evidenced by a 0.1% decline in new orders for nondefense capital goods excluding aircraft.

Treasury yields have slipped following the durable goods orders data. The 2-yr note yield is down one basis point to 3.90% and the 10-yr note yield is down two basis points to 3.79%.

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Originally Posted August 26, 2024 – Waiting anxiously for NVIDIA results