Wall Street is trading without a defined trend after the mixed sign recorded this Thursdaywith the Dow Jones up and the S&P 500 and the Nasdaq technology index down. Unless there is a surprise, the industrial index will close the week with a positive balance, while the other two, more influenced by technology, seem to end the week with losses. The fall was due, in large part, to The market reaction to Nvidia's resultsThe company, which has been leading the US stock market since the boom in artificial intelligence (AI)offered quite positive accounts in its second fiscal quarter. However, and for the first time in quite some time, the technology company was unable to meet some of the most demanding forecasts of the market. «It's a great company whose revenues are still growing at 122%, but it seems that the bar was set a little too high for this earnings season,» said Ryan Detrick, chief market strategist at Carson Group. Other analysts also pointed to Nvidia's delays in chip production Blackwellthe technology firm's most powerful AI-dedicated chip, also did not please analysts, who also fear that the competition is catching up and could end up eating into Nvidia's market share. In this sense, the shares of Dell are rising sharply after the company posted some very convincing results thanks to the push for AI. The technology company, which has increased its profit by 83%, has announced that the business branch that includes AI-optimized servers and networking hardware, registered record revenues of $11.6 billion, up 38% from a year earlier, with record server and networking revenues of $7.7 billion, up 80% from a year earlier.
ALL EYES ON THE FED
In any case, Nvidia has not been the protagonist of this day. Instead, the market has been very attentive to the Federal Reserve (Fed)or rather, its monetary policy. This, despite the fact that today there has been no announcement or intervention of any significance by the American central bank. However, what has been known is the reading of the personal consumption price indexalso known as PCE or private consumption deflator. This reference is The Fed's favorite indicator for guiding its monetary policyand the data obtained for the month of July are better than expected, since both the general index (2.5%) and the underlying index (2.6%) have maintained their level and have improved forecasts, which pointed to an increase of one tenth in each.
Bret Kenwellinvestment analyst at eToro, says that «it is about Another reassuring inflation report for a Federal Reserve that intends to lower rates of interest at its meeting in mid-September.» «It would have taken a Scorching inflation report prompted Fed to back off rate cut nowespecially after Chairman Powell signaled the policy shift during his Jackson Hole speech,» he added. Following the president's latest statements Jerome Powellthe market assumes that the US central bank will lower interest rates in September. However, the question, many experts say, is to know how big the cut will be The Fed's forecast: two out of three analysts are betting on a 25 basis point (bp) cut, while the third is in favour of a 50 bp reduction, according to data from the CME's FedWatch tool. However, a deviation in the PCE reading could completely change these expectations. This, after the US yesterday will revise upwards the GDP of the second quarter. According to the US Department of Commerce, the world's largest economy grew at a rate of 3% between April and June, two-tenths of a percentage point more than the first estimate, due to a better-than-estimated performance of private consumption. Consumer spending almost doubled, up to 2.9%, compared to 1.5% in the previous quarter. «The cooling of GDP prices was less, but underlying prices fell more than expected. Overall, The US economy rebounded in the second quarter, but the rebound did not increase price pressures. In short, the data tasted exactly like investors like it, with the added sweetener (for Fed rate cut expectations) that it has slowed in the third quarter, but has slowed from a higher mark,» notes Ipek Ozkardeskaya, senior analyst at Swissquote Bank. According to Fernandez-Figares, this reading, which reflects «Moderate to solid» growth and «declining» inflationhe put back on the table a soft landing scenario of the economy (lowering inflation without causing a recession), which is positive for the markets. For her part, Ozkardeskaya stresses that The spread between the yield on the 2-year US bond and the 10-year bond has almost closeda sign that the market is confident in this scenario, while The dollar index recoveredreflecting this confidence that the Fed will start cutting rates at the next meeting. However, this strategist points out that the activity in the Fed funds futures shows that the Fed will cut rates by 100 bps between now and the end of the year, a scenario that would imply a sharp slowdown starting in the current quarter.Fortunately, the data is not 'that' alarming. Therefore, I think there is scope to cut Fed rate cut expectations to between 50 and 75 bps this year, which should justify a further positive correction in the US dollar and a greater rotation of the S&P 500 towards growth-friendly cyclical stocksincluding those in the energy and financial sectors,” she adds. “The rotation out of the technology sector into other sectors, also called reflation, is expected to be positive for European stocks. In fact, capital inflows into European stocks outpaced inflows into US markets in the second quarter, driven precisely by the expectation that global rate cuts would be better for reflation-friendly European stocks than for their tech-heavy US counterparts (and also because the European Central Bank (ECB) started cutting rates before the Federal Reserve),” Ozkardeskaya reflects. However, she also warns that expectations of rate cuts will not be able to “infinitely and by themselves” attract investors to the Old Continent, especially in a context where Europe is rapidly slowing down.
OTHER MARKETS
In other markets, the euro is appreciated against the 'greenback' (+0.07%, 1.10 dollars). For its part, the oil crude oil rises by around 0.6% Brent is quoted at 80.4 dollars and the barrel of WTI is exchanged for 76.3 dollars. The gold slightly decreased (-0.04%, 2,559 dollars), as did the silver (-0.03%, $29.98). The bitcoin is unable to consolidate the $60,000 and the ethereum is close to losing 2,500. The bond yield American 10-year relaxes to 3.861%.