A late-afternoon slide by some Big Tech companies cut into Wall Street’s gains Thursday, leading to a mixed finish for U.S. stock indexes. The S&P 500 ended flat after giving up an earlier gain of nearly 1%, while the Dow Jones Industrial Average managed a 0.6% gain, enough for its third all-time high since Monday. Despite the mixed finish, gainers outnumbered decliners by roughly two to one on the New York Stock Exchange. Nvidia, one of the S&P 500’s most influential companies, saw its shares fall 6.4% despite stellar results for the second quarter, highlighting the volatility in the market.
Nvidia’s earnings beat and forecast may not have been a big enough surprise for some traders, but surging demand for its artificial intelligence chips show that it is powering the AI revolution. The market rallied earlier as encouraging data helped shift traders’ focus back on the U.S. economy, with the Commerce Department upgrading its assessment of U.S. economic growth for the second quarter to 3%. This signals that the economy remains strong despite pressure from stubborn inflation and high interest rates.
Traders also had their eye on more corporate earnings, with CrowdStrike Holdings rising 2.8% after beating analysts’ second-quarter financial forecasts. However, Dollar General slumped 32.1% after cutting its earnings forecast, while Best Buy jumped 14.1% after beating Wall Street forecasts. The mostly solid earnings and economic growth updates are capping off a month of encouraging reports for the broader economy, with retail sales, employment, and consumer confidence remaining strong. Bill Adams, chief economist for Comerica Bank, noted that solid growth of consumer spending propelled the economy forward in the second quarter.
The solid economic data and easing of inflation have bolstered hopes for the Federal Reserve to achieve a “soft landing” for the economy after raising its benchmark interest rate to a two-decade high. The central bank has signaled that it intends to start cutting its benchmark interest rate, with traders expecting the first cut to happen at the next meeting in September. Anticipation for lower interest rates ahead is helping to ease some pressure on the housing market, with the average rate on a 30-year mortgage easing for the second week in a row.
All told, the S&P 500 lost 0.22 points to 5,591.96, the Dow gained 243.63 points to 41,335.05, and the Nasdaq fell 39.60 points to 17,516.43. Markets in Europe were mostly higher, and markets in Asia were mixed. The key report of the week comes on Friday when the U.S. government releases its July data on inflation with the PCE report. Economists expect inflation to edge up to 2.6% in July from 2.5% in June, with the Fed expected to cut its benchmark rate by 1% by the end of the year. Bond yields rose in the Treasury market, with the yield on the 10-year Treasury rising to 3.86% from 3.84% late Wednesday.
