Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 15, 2023. REUTERS/Brendan McDermid/File Photo Acquire License Rights
- Nvidia gains ahead of quarterly results
- Sports retailers fall for Foot Locker’s gloomy forecast
- Peloton crashes after missing positive cash flow target
- Indexes up: Dow 0.39%, S&P 0.88%, Nasdaq 1.48%
Aug 23 (Reuters) – Major Wall Street indices rose on Wednesday as shares of Nvidia (NVDA.O) fell on hopes of another strong outlook from the chip designer, which predicted an artificial intelligence-driven rally in Megacap -Growth stocks soared.
Rising bets that Nvidia’s sales target will beat Wall Street estimates pushed the chip designer’s stock to a record high on Tuesday. However, analysts also fear a major sell-off if the company fails to meet investor expectations.
Nvidia’s shares rose 2.1%. The company is expected to release its quarterly results after the market close on Wednesday.
A blowout forecast from the company last quarter was one of the biggest catalysts for the S&P 500 (.SPX)’s 15% rise so far this year.
“A lot of investors expect that you won’t be providing guidance and commentary like that unless you’re pretty confident you’re going to outright beat the numbers in the following quarter,” said Matt Stucky, senior equity portfolio manager at Northwestern Mutual Wealth Management Company.
Shares in some other key growth stocks rebounded from declines in the first few weeks of August, as signs of strength in the US economy had fueled fears that the Federal Reserve might keep interest rates high for longer.
Alphabet (GOOGL.O) and Meta Platforms (META.O) rose 2.8% and 3.1%, respectively, while Netflix (NFLX.O) gained 5.4% after data showed signups in the United States remained high.
The actions sent the S&P 500 Communication Services Index (.SPLRCL) up 2.3%.
Equities received a further boost as the US 10-year Treasury yield fell from near 16-year highs after weak economic data from the United States and the euro zone pointed to global disinflation.
The data came ahead of Federal Reserve Chair Jerome Powell’s comments on Friday, which are being analyzed for further clues about the central bank’s interest rate path.
According to CME Group’s FedWatch tool, traders’ bet on a Fed hike pause next month was 88.5%.
US stocks will post little gains through year-end, according to strategists in a Reuters poll. The S&P 500 is expected to end the year at 4,496 points, about 2.2% up from Monday’s close.
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As of 11:38 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 133.05 points, or 0.39%, to 34,421.88, the S&P 500 (.SPX) was up 38.58 points, or 0.88% 4,426.13 and the Nasdaq Composite (.IXIC) was up 199.25 points, or 1.48%, to 13,705.12.
Sports retailers Nike (NKE.N) and Under Armor (UAA.N) fell 3.8% and 1.7%, respectively, after Foot Locker (FL.N) issued an upbeat earnings forecast, whose shares fell 32.9% broke in.
Shares in drugmakers Gilead Sciences (GILD.O) and Merck & Co (MRK.N) rose 1.2% and 4.2%, respectively, after Swiss rival Roche (ROG.S) published accidentally positive study data on lung cancer drugs.
Peloton Interactive (PTON.O) shares fell 22.5% to a record low after the fitness equipment maker pushed back its positive cash flow target.
The rising issues outpaced the number of falling issues on the NYSE by a 3.28 to 1 ratio and by a 2.31 to 1 ratio on the Nasdaq.
The S&P index posted 7 new 52-week highs and 10 new lows, while the Nasdaq made 35 new highs and 115 new lows.
Reporting by Amruta Khandekar and Shristi Achar A; Edited by Shinjini Ganguli and Anil D’Silva
Our standards: The Thomson Reuters Trust Principles.
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