It was quite a steady week for markets, with Nvidia’s earnings and stock price under the microscope and fresh US data lifting investor sentiment.
Here’s our Head of Investments, Andrew Prosser, breaking down the latest stories this week.
Powell sets the tone
After Jerome Powell’s remarks at Jackson Hole signalled that further rate cuts are likely as the US labour market cools, equities largely held on to last week’s gains.
Nvidia stock falls
Nvidia’s earnings were the big story this week, as they are an indicator of the overall AI growth story. So how did they do?
Nvidia delivered another strong quarter as revenue rose about 50% year on year, and the company beat expectations on earnings, margins and next-quarter sales guidance. Even so, the stock fell around 3% after results.
There are two reasons for this. Investors are so used to Nvidia beating expectations that it no longer moves the needle. It has to do so in a grand fashion for it to continue pleasing investors.
Plus, it didn’t provide any guidance on revenue from China, which added caution to the ongoing trade tensions between the USA and China.
S&P hits a new high
Stronger-than-expected US GDP data on Thursday helped markets shake off the post-Nvidia wobble. The S&P 500 reached another all-time high in US dollar terms.
Inflation in line
Friday’s US inflation read came in as expected. That kept the soft-landing narrative intact and nudged market odds of a rate cut at the next Fed meeting on 17 September closer to the high-80s.
What it means for investors
- AI is still the biggest growth story, but expectations for leadings like Nvidia, Meta and OpenAI are quite high.
- Macro remains supportive as inflation trends allow room for policy easing.
- Keep an eye on policy dates as the Fed’s September decision will be the next major catalyst.
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