Market bull bid suffers major reversal amid Nvidia earnings and Powell’s speech: Weekly Review

An attempted rally in the stock market gained momentum to start the week, but then suffered an ugly reversal on Thursday after initially gaining. nvidia (NVDA) crushed the views and raised the steering sharply again. NVDA erased post-earnings gains but rose sharply for the week, despite sharp declines in several AI runs. Federal Reserve Chairman Jerome Powell said on Friday that inflation is too high and interest rates may have to continue to rise.

Meanwhile, many retailers sold their products due to poor results or guidance, incl Dick’s Sporting Goods (dex), foot locker (fl) And Messi (M), althoug Abercrombie & Fitch (nose) rose on solid earnings.

Treasury yields jumped to their highest level in 15 years, but then fell back a bit. The US dollar is at its highest level in 2023.

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The market correction is not over yet

The stock market rally isn’t over for the S&P 500 and Nasdaq, but Thursday’s bearish reversal from the 50-day line was an ominous sign. The patch is still in effect at the moment. Nvidia’s earnings failed to revive the market, while many retailers cautioned against consumer spending. The 10-year Treasury yield fell after reaching a 15-year high.

Powell: The threat to raise interest rates is real

Federal Reserve Chairman Jerome Powell, in his annual policy address in Jackson Hole, said policymakers may need to raise interest rates again due to the sudden strength of the US economy. However, he stressed that the Fed would “proceed cautiously” with any increases. Overall, the rhetoric sounded a bit more hawkish than Powell’s comments after the Fed’s meeting in late July. The odds of a late September hike are still low, but are now roughly 50-50 for a move by the November 1st meeting.

Economic data is mixed

The latest batch of data came in mixed, detracting slightly from perceptions that the US economy is in shambles in the third quarter.

The US production composite index released by Standard & Poor’s Global fell to 50.4 in August, just above the neutral 50 level, from 52 in July. The services activity index fell to 51 from 52.3, also the lowest level in six months. The manufacturing production index slipped back into contraction territory, falling 2.7 points to 47.5.

Durable Goods Orders fell 5.2% in July, and the picture wasn’t entirely solid even excluding the typical fluctuations in Boeing aircraft orders. Core capital goods orders, which is seen as an indicator of capital spending, rose 0.1%, while orders for the previous month were revised down to -0.2% from a preliminary reading of +0.4%.

However, there is no sign of layoffs picking up, with new jobless claims falling to 230,000 in the week ending Aug. 19, down from 240,000 the previous week. The number of people continuing to claim unemployment benefits fell to 1.702 million, down about 9% from the last peak in early April.

Meanwhile, new home sales rose to an annual rate of 714,000, the highest level in 17 months, from a downwardly revised 684,000 the previous month. The improvement comes as existing home sales are still sinking near long-term lows due to limited supply: July’s annual pace of 4.07m was down 2.2% versus June and 16.6% from a year earlier.

Artificial intelligence chips power Nvidia Beat

AI chip maker nvidia (NVDA) smashed Wall Street’s lofty forecasts for the fiscal second quarter and drew expectations much higher than views for the current period. This was the second consecutive big quarter for Nvidia. On a yearly basis, its profits rose 429% while sales rose 101% thanks to overwhelming demand for chips and hardware for AI data centers. NVIDIA expected its sales to rise by 170% in the current quarter. analog devices (led) missed estimates for the third fiscal quarter as customers run through high inventories. It also trended downward during the current quarter. And Marvell technology (MRVL) narrowly exceeded fiscal targets for the second quarter and provided a consistent forecast for the third quarter.

Retailers point out problems to consumers

Macy’s reported another quarter of year-over-year declines, with adjusted earnings per share down 74% but still beating views. The supermarket giant said it was cautious about consumer spending. Dick’s Sporting Goods (dex) And foot locker (fl) cut guidance after disappointing quarterly results. Dick’s blamed its problems in part on rising rates of theft and organized crime, while Foot Locker cited consumer problems. Many other retailers have had poor results.

Young adult stores are bright spots

Abercrombie & Fitch (nose), Urban Outfitters (Urban) And Guess (GES) posted strong earnings that easily outperformed views with revenue growth also picking up. Abercrombie and Jess also brought up the directives. These two stocks have risen significantly. URBN stock rose on earnings but fell for the week.

Miniso’s earnings jump

Chinese retailer Miniso (MNSO) topped its fiscal fourth-quarter estimates, with a 127% earnings per share gain. Revenue grew 30% to $448.5 million. Miniso opened 277 stores in the quarter, including 56 overseas. In Chinese currency terms, adjusted earnings per ad increased by 150% with revenue growing by 40%. MNSO stock rose, breaking out of the shelf formation.

software earnings

HR software maker a work day (day) handily topped Wall Street’s estimates for the second quarter. Earnings per share jumped 72% while revenue rose 16% to $1.79 billion. WDAY stock rose modestly. snowflake (snow) reported a significant jump in profits while revenue rose 36% to $674 million. The data analytics software maker has been directed after lowering the ratings several times. Chief Financial Officer Michael Scarpelli said Snowflake sees “encouraging signs of stabilization, but not recovery” in corporate software spending. SNOW stock reversed lower on Thursday.

News summary

Splunk (SPLK) after the data-analytics software company handily beat its second-quarter views and raised its full-year forecast. Revenue increased by 14% to $911 million, easily surpassing the number of views. Earnings per share rose to 71 cents. Arrows exploded from the base.

Baidu (Bedo) reported a 43% increase in net profit, strongly outpacing the number of views in the second quarter. Revenue rose 15% to $4.67 billion, also beating expectations. The Chinese search giant said AI represented “a huge market opportunity for us”. US-listed BIDU shares rose 2.75% on Tuesday.

Video zoom (ZM) beat views with a 28% increase in EPS in the second quarter ended July with revenue up 4% to $1.14 billion. The video conferencing company also raised guidance for the rest of the year. ZM shares were up slightly for the week as of Friday afternoon.

Louie (a little) reported a decline of 2% in earnings per share, topping the number of views, while sales decreased by 9%, in line with expectations. Professional sales were strong. Low inventory rose modestly.

Boeing (Bachelor’s) has found a new manufacturing issue with the 737 MAX that could delay deliveries again. It is the job of the supplier Air Spirit Systems (SPR). Boeing says it has a solution. BA stock is down while SPR is down.

Moderna (mRNA) Covid vaccine makers jumped on Monday amid reports of a spike in hospitalizations linked to Covid. MRNA has also benefited from a new deal with China’s Carsgen to study a cancer vaccine system. The companies will test Moderna’s off-the-shelf cancer vaccine using Carsgen’s cell therapy. Cell therapy has shown promising results in patients with stomach, pancreatic and other gastrointestinal cancers.

Tol brothers (Tulle) reported a 59% gain in earnings per share, the second consecutive quarter of exponential growth, while revenue rose 8%. Both are overridden financial views for the third quarter. Luxury home builder heads up. Stocks rose.

autodesk (ADSC), a computer-aided design and workflow software maker, beat estimates for the second fiscal quarter and topped the outlook with its forecast. Its second-quarter profit rose 16% while sales rose 9%, to $1.35 billion.

netease (NTES), a leading provider of online games and internet services in China, beat EPS estimates for the second quarter with a 61% gain, but sales disappointed with a 3% drop to $3.3 billion.

intuit (You and) beat the financial views for the fourth quarter but provided a mixed forecast for the current period. The financial software company’s earnings per share grew 50%, with sales increasing 12% to $2.71 billion.

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