(Bloomberg) — U.S. stocks pared early session gains on Thursday as investors weighed mixed economic data against a strong outlook for Nvidia Corp and the risks Federal Reserve Chairman Jerome Powell could take a hawkish tone in his speech Friday in Jackson Hole, Wyoming.
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The S&P 500 is down 0.3%, as of 10:33 am in New York, while the Nasdaq 100 is down 0.6%, even after Nvidia hit an all-time high and the Philadelphia Semiconductor rose more than 1.5%. The Dow Jones Industrial Average was just below the flat level. The policy-sensitive 2-year Treasury yield hovered near 5%.
Shares of Boeing and its largest supplier, Spirit AeroSystems Holdings Inc., fell after the planemaker disclosed improperly drilled holes in a component that helps maintain cabin pressure inside the 737 Max. Meanwhile, Nvidia shares rose after the chipmaker that has been at the forefront of the industry-wide artificial intelligence race delivered its third consecutive sales forecast that beat Wall Street estimates.
With only a few days left until the end of the month, the S&P 500 and Nasdaq 100 are on track for their worst month of the year. However, after Nvidia’s massive results, the Nasdaq 100 has an opportunity to change course and quell concerns that technology valuations have become out of sync with reality.
“Nvidia is the new Tesla of the stock market, as the market blindly assigns a ridiculously high and unrealistic valuation,” David Trainer, chief investment officer of New Constructs, wrote in a note to clients. “We don’t deny that Nvidia is a great company, but we do point out that their assessment is beyond lofty and unwarranted.”
US jobless claims fell to a three-week low, indicating that demand for workers remains healthy. Initial claims fell by 10,000 to 230,000 in the week ending Aug. 19, according to Labor Department data released Thursday. The median estimate in a Bloomberg survey of economists was calling for 240,000 applications.
Former St. Louis Federal Reserve Bank President James Bullard said a pickup in economic activity this summer could delay the Fed’s plans to end interest rate increases. While Bullard no longer serves as a central bank policymaker, the market still greatly appreciates his insights into the state of the economy.
Meanwhile, the Fed’s Jackson Hole Symposium kicks off on Thursday and will feature appearances by several central bank leaders, including Fed Chair Jerome Powell on Friday morning. Investors are eagerly awaiting his comments and hope his speech will allay fears that the central bank still has more time in its rate hike cycle.
Sectors under focus:
Semiconductor and artificial intelligence stocks jumped after Nvidia forecast third-quarter revenue that far exceeded average analyst estimates.
Shares of Boeing and its largest supplier, Spirit AeroSystems Holdings Inc., fell after the planemaker disclosed improperly drilled holes in a component that helps maintain cabin pressure inside the 737 Max.
Dollar Tree fell after the retailer delivered a third-quarter earnings forecast that broadly beat expectations. Gross margin for the second quarter came in just shy of estimates.
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