The S&P 500 and Nasdaq climbed on Monday as Nvidia shares rose ahead of the chip designer’s earnings this week, with investors also focused on a meeting of central bank policymakers for clues on the U.S. interest rate path. Nvidia, which sharply outperformed its megacap peers with gains of nearly 6% last week, climbed 4.4% as HSBC raised its price target on the stock to $780, the second highest on Wall Street. The Associated Press has the story:
Wall Street is holding steadier after 3rd straight losing week
Newslooks- NEW YORK (AP)
Wall Street is mixed on Monday and holding a bit steadier after its third straight losing week amid its dismal August. The S&P 500 was up 0.4% in early trading. The Dow Jones Industrial Average was down 22 points, or 0.1%, at 34,478, as of 9:50 a.m. Eastern time, and the Nasdaq composite was 0.8% higher.
Security software maker Palo Alto Networks jumped 15% for the biggest gain in the S&P 500. The California company reported better profit for the spring than analysts expected late Friday.
Electric vehicle maker Tesla rose 4.4% to scrape back some of last week’s 11% loss. It struggled with other high-growth stocks last week because they’re seen as some of the hardest hit by higher interest rates, and bond yields have been swiftly rising.
Besides worries about the tightening grip from the bond market, concerns about a faltering economic recovery in China have also caused markets worldwide to sway this month.
The week’s main event is likely to be a speech on Friday by Federal Reserve Chair Jerome Powell. The Jackson Hole, Wyoming, setting for the speech has been the home of major policy announcements in the past by the Fed, and it’s one of the most important events each year for central bankers globally.
The worry is that Powell will dash investors’ hopes that the Fed has already hiked interest rates for the final time and that its next move is to cut rates early next year.
The Fed has already pulled its main interest rate to its highest level since 2001 in its effort to grind down high inflation. High rates do that by slowing the entire economy bluntly and hurting prices for investments.
The yield on the 10-year Treasury again on Monday morning neared its highest level since 2007. That’s good for bond investors, who are getting paid more in interest for their investments. But it also makes investors less willing to pay high prices for stocks and other investments that are prone to bigger swings than safe U.S. government bonds.
The 10-year yield rose to 4.32% from 4.25% late Friday. If it hits 4.34%, it will be at its highest since 2007. It was below 0.70% three years ago.
For all the anticipation about Powell’s speech, he may not end up sending a strong signal out of Jackson Hole, according to Goldman Sachs’ Lexi Kanter and Michael Cahill.
In the minutes from its last policy meeting in July, the Fed seemed to indicate it was unsure about its next move. It stressed again that it will make its upcoming decisions on rates based on what incoming data says about inflation and the economy. The week after Powell’s speech, big reports are due for each of those topics. One is the latest monthly update on the Fed’s preferred way of measuring inflation, and the other is the monthly jobs report.
“The Fed will likely wait to be informed by these new data before changing their current posture,” Kanter and Cahill wrote in a report.
Economists at Bank of America, meanwhile, say there’s a chance Powell will say that every upcoming meeting of the Fed has a possibility to see a hike in interest rates given how strong recent economic reports have been.
“We think Powell’s tone at Jackson Hole will be less balanced than the July FOMC minutes,” they wrote in a BofA Global Research report.
The economy has remained remarkably resilient despite much higher interest rates. While that eases long-held worries about a possible recession, it could also add upward pressure on inflation.
Another big event for the market will be Nvidia’s profit report scheduled for Wednesday. The chip maker’s stock has exploded higher this year, more than tripling on excitement about tremendous demand due to artificial-intelligence technology.
Nvidia’s report on Wednesday may offer a hint about whether all the furor was deserved. It rose 4.6% Monday.
The earnings reporting season for the spring is winding down for S&P 500 companies. The majority have reported better results than feared, as is usually the case. But that’s done little to help support the stock market. The S&P 500 in August has given back more than a quarter of its big gains from the first seven months of the year.
Besides the possibility about higher rates for longer, concerns about China’s economic recovery have also weighed on markets globally.
Hong Kong’s Hang Seng tumbled another 1.8% Monday and is down 12.2% for August so far alone. Stocks also fell 1.2% in Shanghai.
China cut a bank lending rate, but the move fell short of what some analysts expected.
Coming into this year, the expectation was for a strong economic recovery by China would help prop up the global economy. The world’s second-largest economy instead has fallen well short of forecasts.
In other markets abroad, stock indexes were modestly higher across Europe and much of Asia outside of China.
