S&P 500 E-mini futures continued to fall on Thursday, down 0.16%, after the index fell 0.6% on Wednesday.
These declines come as markets reacted mixed to Nvidia’s better-than-expected quarterly results, ending in July.
Nvidia shares fell sharply in after-hours trading and also this morning, falling 5% in Germany’s Gettex and nearly 3% in Milan.
Revenue, net income and projections for the current quarter beat market expectations, according to The Wall Street Journal. What may not have been as impressive was the drop in gross profit margin from the previous quarter, in light of the issues at Blackwell’s next-generation manufacturing, which the CEO said would be a game changer for the industry. However, the company said it will ramp up production in light of the high demand, also according to The Journal.
Add to that the positive talk from CEO Jensen Huang with analysts on the earnings call, emphasizing the company’s role in transforming the future of data centers and artificial intelligence.
In any case, the markets continued to pressure downward despite what appeared to be a lack of negative signs from the company’s results, which could have been the starting point for a downward trend for the broader stock market.
Therefore, I believe that the markets may maintain the upward momentum in the coming days, especially with the prevailing atmosphere of optimism about the inevitable interest rate cut starting next September, and what may reach a reduction of one percentage point by the end of the year.
The focus turns to the weekly initial jobless benefits, which are expected to increase by the same amount as in last week’s reading of 232,000 claims. As for Friday, the markets await the reading of the Federal Reserve’s preferred indicator for measuring inflation, the core Personal Consumption Expenditures (core PCE) Price Index, which is expected to record an acceleration in growth to 2.7% last July YoY.
Even if these numbers are worse than expected, I don’t expect them to dampen market optimism about the path of rate cuts this year, but they may reduce the probability of a 50-point cut in September. The probability of such a large cut is 35% compared to 65% for a quarter-point cut, according to the CME Fed Watch Tool.
