The Dow Jones Industrial Average (DJI) hit a record closing high on Monday, while the other two major stock indexes fell, as investors weighed the possibility of an interest rate cut on the horizon and prepared for a busy week dominated by Nvidia’s (NVDA) earnings report.
The Dow Jones Industrial Average rose more than 0.1%, closing at a record high of 41,240.52. The S&P 500 (^GSPC) fell 0.3%, and the tech-heavy Nasdaq Composite Index (^IXIC) lost about 0.8%.
Technology stocks were weak during the trading session, with shares of AI chip giant Nvidia falling 2% along with semiconductor peer Broadcom (AVGO) and EV maker Tesla (TSLA).
Stocks are trailing their weekly gains after Fed Chairman Jerome Powell said the central bank is ready to start cutting interest rates in September. All major stock indexes rose more than 1% last week.
Markets quickly began pricing in a total of 1% rate cuts by the end of 2024. But with only three Fed meetings left this year — in September, November and December — and the August jobs report yet to be released, Wall Street is wondering when, and if, a 50-percentage-point cut will come.
All eyes are now on the week’s highlight event, Nvidia’s earnings report, which will likely determine whether the market mood remains upbeat. If the chipmaker’s results on Wednesday are disappointing, it could deal a further blow to the AI trade that has been driving its stock rally and test the market’s recovery from its August lows.
Also scheduled for Friday is the release of the PCE index, Fed policymakers’ preferred inflation measure, which will likely factor into interest rate path calculations, and second-quarter GDP figures are due to be released on Thursday.
Meanwhile, oil prices rose about 3% on reports of production halts in Libya and concerns about rising tensions in the Middle East following attacks by Israel and Hezbollah. Global benchmark Brent crude futures (BZ=F) closed at $81.43 a barrel, while U.S. benchmark WTI crude futures (CL=F) closed at $77.42 a barrel.
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Monday, August 26, 2024, 1:05 PM PDT
The Dow closed at an all-time high, but tech stocks fell and the S&P 500 and Nasdaq slumped.
The Dow Jones Industrial Average (^DJI) closed at a record high on Monday, while the S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) fell, and shares of NVIDIA (NVDA) fell about 2% ahead of the release of quarterly earnings later this week.
The Dow Jones Industrial Average rose 0.1% to close at 41,240.52, led by gains in Materials (XLP), Utilities (XLU), and Energy (XLE).
Technology (XLK) stocks slumped during the session, with Broadcom (AVGO) and electric vehicle maker Tesla (TSLA) falling more than 3%, dragging down the Nasdaq and S&P 500.
PDD Holdings (PDD), also known as Pinduoduo and the parent company of e-commerce platform Temu, fell 28% after reporting disappointing second-quarter results.
Stocks gave up gains on Friday after Fed Chairman Jerome Powell suggested policymakers were ready to reverse course and cut interest rates at the next FOMC meeting in September.
Monday, August 26, 2024 12:21 PM PDT
History shows that aggressive Fed rate cuts are not good for stocks
Now that Fed Chairman Jerome Powell has opened the door to a rate-cutting cycle, economists are reasoning that how much the Fed cuts rates in 2024 will depend in large part on how well the labor market holds up.
Many economists argue that if the August employment report, due on September 6, confirms that July’s data may have exaggerated the labor market’s weakness, the Fed will start with a 25 basis point rate cut.
In other words, the continued signs of a weakening economy mean the Fed doesn’t need to cut interest rates — and for many strategists, that remains a key thing for investors to focus on when considering a Fed rate cut.
When the Fed cuts rates because the economy needs help, it’s not good for stocks. As long as the economy remains strong, the S&P 500 has risen at least 11% a year after the first Fed rate cut, dating back to 1989, according to a survey by Truist co-chief investment officer Keith Lerner sent to clients on Monday.
But when the US economy fell into a recession over the next 12 months, the S&P 500 fell by at least 14% over the following year, according to Learner’s research.
This is a clear indication of today’s environment: if a major downturn in the labor market forces the Fed to cut rates more aggressively, history shows that this is not a welcome sign for the stock market.
Monday, August 26, 2024 at 11:47 AM PDT
Nvidia reports second-quarter results Wednesday in big test for AI deal
Shares of semiconductor giant Nvidia (NVDA) fell more than 2% on Monday as investors awaited the company’s quarterly earnings report, due after the close of trading on Wednesday.
Dan Howley of Yahoo Finance reports:
NVIDIA’s earnings release, the most anticipated result of the quarter, will have ripple effects across the technology industry as investors look for signs that AI deals will continue to dominate market conversations in the second half of the year.
Nvidia shares are up more than 163% year to date and up 60% over the past six months. Shares of rival AMD (AMD) are up 9% year to date and down about 14% over the past six months.
Intel (INTC) shares have fallen 57% since the beginning of the year and 53% in the past six months as the company continues to struggle amid a massive restructuring effort.
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Monday, August 26, 2024 at 11:00 AM PDT
Investors are betting that Powell’s change of course will ease woes for regional banks.
David Hollerith of Yahoo Finance reports:
Investors are betting that a change of policy from Federal Reserve Chairman Jerome Powell will boost U.S. bank stocks as low interest rates are expected to bring much-needed relief to some struggling financial institutions.
The bet helped push the index tracking mid-sized regional banks (^KRX) up 5% on Friday, the index’s biggest one-day gain in all of 2024. The index maintained that gain on Monday.
The big move came after Powell sent a safety signal to markets by saying “it’s time to adjust policy,” preparing to cut interest rates for the first time in more than four years.
The index tracking the broad banking sector (^BKX) is up more than 18% this year, in line with the performance of the S&P 500 (^GSPC).
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Monday, August 26, 2024 at 10:30 a.m. PDT
Oil prices rise 3% on Middle East tensions and Libyan production halt
Oil prices surged on Monday following the halt in Libya’s oil production and rising tensions in the Middle East.
West Texas Intermediate (CL=F) rose 3% to above $77 a barrel, while the international benchmark Brent crude (BZ=F) rose more than 2% to above $80 a barrel.
Israel carried out airstrikes at the weekend against Tehran-backed Hezbollah rocket launch sites in Lebanon, raising fears of a wider conflict in the region involving Iran.
“Escalating tensions could provoke a military response from Iran, which could slow global oil movements,” Dennis Kistler, senior vice president at BOK Financial, wrote in a client note on Monday.
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Monday, August 26, 2024 at 10:00 AM PDT
Gold prices rise amid geopolitical tensions and expectations of rate cuts
Gold prices neared a record high on Monday as investors flocked to the precious metal on rising geopolitical tensions and expectations of a Federal Reserve interest rate cut in September.
Gold futures for December delivery (GC=F) rose above $2,552 an ounce.
Precious metals have risen more than 23% since the start of the year, making them one of the best-performing commodities this year.
Monday, August 26, 2024 at 9:39 AM PDT
Tech stocks slump as Nvidia, Broadcom and Tesla fall
Tech stocks fell on Monday, dragging down the S&P 500 (^GSPC) and Nasdaq Composite Index (^IXIC).
Nvidia (NVDA) shares were down more than 1.5% by 12:30 p.m. ET, though they had retreated from the session low. Semiconductor maker Broadcom (AVGO) was down more than 3%, and electric-vehicle maker Tesla (TSLA) was down more than 2%.
Meanwhile, materials (XLP), utilities (XLU) and energy (XLE) stocks rose, helping to lift the Dow Jones Industrial Average (^DJI).
Technology stocks were weaker on Monday, while materials, utilities and energy stocks rose.
Monday, August 26, 2024 at 8:30 a.m. PDT
McLaren CEO will follow Ferrari’s blueprint for success, but with ‘no arrogance’
Pras Subramanian of Yahoo Finance reports:
CARMEL, Calif. — McLaren CEO Michael Leiters believes the British luxury supercar maker can achieve the same kind of success as Ferrari, but in a slightly different way.
“We have one element to our brand, and that’s belonging,” Reiters, who has been at the helm of McLaren for two years after eight years as Ferrari’s chief technical officer, said in an interview with Yahoo Finance during Monterey Car Week. “We want talent here. … We’ll talk to anybody. There’s no arrogance.”
This could be interpreted as a not-so-veiled criticism of Ferrari, given that the Italian luxury sports car maker is notorious for secrecy, invitation-only events and only selling new cars to existing or preferred customers.
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Monday, August 26, 2024 at 7:49 AM PDT
Dow up 200 points, Nasdaq down, Nvidia down 2%
Markets were split on Monday as the Dow Jones Industrial Average (^DJI) rose more than 200 points to hit a new intraday high.
The S&P 500 (^GSPC) lost 0.3%, erasing the previous day’s gains, while the tech-heavy Nasdaq Composite Index (^IXIC) fell more than 1% on a drop in shares of Nvidia (NVDA).
The AI chip giant is scheduled to release its quarterly earnings after the market closes this Wednesday.
EV giant Tesla (TSLA) also fell more than 3%, weighing on the S&P 500 and Nasdaq.
Monday, August 26, 2024, 7:31 a.m. PDT
The Dow rises 200 points to a new intraday record
The Dow Jones Industrial Average (^DJI) rose more than 200 points (0.5%) on Monday morning to hit an intraday record high of 41,394.10.
Energy and materials led gains on Monday, while technology stocks struggled, with the tech-heavy Nasdaq Composite Index (^IXIC) down 0.7% and the S&P 500 (^GSPC) slightly lower.
Monday, August 26, 2024 at 6:42 AM PDT
S&P 500 nears all-time high
The S&P 500 (^GSPC) rose 0.3% on Monday, inching closer to its July record high. The index is less than 0.5% away from its July 16 all-time high of 5,667.20.
The Dow Jones Industrial Average (^DJI) rose 0.3% on Monday, while the tech-heavy Nasdaq Composite Index (^IXIC) was just above flat after opening slightly lower.
Monday, August 26, 2024, 6:31 a.m. PDT
Nvidia shares start mixed this week as investors focus on the company’s earnings
Stocks were mixed on Monday as investors’ attention shifted to a busy week led by Nvidia’s (NVDA) earnings report.
The S&P 500 (^GSPC) rose about 0.1%, the Dow Jones Industrial Average (^DJI) added about 0.2%, and the tech-heavy Nasdaq Composite Index (^IXIC) was just below flat after the major stock indexes rose on Friday.
The focus this week will undoubtedly be on Nvidia’s performance. The AI chip giant has led the market this year, so a lot is riding on it. Nvidia shares were little changed Monday morning after rising 4.5% on Friday.
Stocks approached new record highs on Friday after Federal Reserve Chairman Jerome Powell made it clear the central bank was ready to start cutting interest rates as soon as September. The benchmark S&P 500 index is down less than 1% from its all-time closing high hit in July.