Wall Street: US stocks rise ahead of AI giant Nvidia's eagerly anticipated earnings report
US markets rally after Powell's Jackson Hole speech sparks speculation of rate cuts. Nvidia’s second quarter earnings report may drive further momentum.
![Wall Street](http://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/news-article-image-folder/Adobe_wall_street_26-06-2024.jpg/jcr:content/renditions/original-size.webp)
Market rally ignites as Powell hints at policy shift
US stock markets surged on Friday night following Ferderal Reserve (Fed) Chair Powell’s speech at Jackson Hole, which included the dovish comment, "the time has come for policy to adjust." For the week, the S&P 500 gained 1.45%, the Dow Jones added 1.27%, and the Nasdaq added 1.1%.
Powell's speech made clear that the balance of risks has shifted toward the labour market. He noted that the labour market has cooled considerably and is unlikely to be a source of elevated inflationary pressures. He went on to say that the Fed does not "seek or welcome further cooling in labour market conditions."
Potential rate cuts on the horizon
While Powell did not comment on the size or pace of the cutting cycle, saying it will be dependent on "incoming data, the evolving outlook, and the balance of risks," there was language that opened the door to a 50 basis point (bp) rate cut in September.
The interest rates market is pricing in a 75% chance of a 25 bp cut and a 25% chance of a 50 bp cut in September. The August non-farm payrolls (NFP) report, due on 6 September, will be pivotal in deciding which it is. If the US economy were to create less than 100,000 jobs in August combined with the unemployment rate printing at 4.3% or higher, it would tip the balance in favour of a 50 bp Fed cut in September.
Attention now turns to Nvidia’s second-quarter (Q2) 2024 earnings report, with core personal consumption expenditures (PCE) inflation also in focus as the Fed's preferred measure of inflation. PCE is expected to rise marginally to 2.7% Year-over-Year (YoY) in July, up from 2.6% previously.
What is really expected from Nvidia’s earnings?
Date: 29 August, at 6:20am AEST
A full preview of Nvidia’s earnings, written by my colleague Axel Rudolph, is available here.
The market has put reports of delays to the new next-gen Blackwell GPU behind it for the time being. The delay to Blackwell will have minimal impact on this quarter's earnings as Blackwell’s revenue contribution is not expected to ramp up until the fourth quarter (Q4) 2024.
With the market positioned long ahead of Thursday's earnings release, here are the key numbers to watch as well as what we think the real numbers are that the company needs to meet and most likely exceed to avoid investor disappointment.
Q2 2024 expectations
- Revenue: $28.6 billion
- Gross margins: 75.6%
- Earnings per share (EPS): $0.64
Q3 2024 expectations
- Revenue: $31.414 billion
- Gross margins: 75.3%
- EPS: $0.71
For Nvidia’s share price to meet expectations and potentially move higher, Q2 revenue of greater than $29.85 billion and EPS of $0.69 would likely be required.
Nvidia technical analysis
Nvidia’s share price is up over 161% year-to-date and has nearly fully recovered from its 35% drop from June to August. The recovery puts Nvidia’s all-time high of $140.76 firmly in focus ahead of this week's earnings, with a sustained break above this level potentially paving the way for a move towards $150.
On the downside, strong support lies at $100, with further support at the $90.69 low from early August. Below this, the 200-day moving average at $85.26 provides additional support.
Nasdaq 100 technical analysis
The Nasdaq 100 has rebounded significantly from the August low, but with Nvidia's earnings report and the typically challenging month of September approaching, the outlook is uncertain. We see a 50/50 chance of what might happen next.
Specifically, we are uncertain whether the sell-down to the early August low completed a much-needed pullback, with a test and break of the July 20,690 high to follow. Or whether the early August sell-off was the first leg of a correction and is missing another leg lower.
A sustained break of support at 19,400 after Nvidia's earnings report would suggest the latter scenario. Conversely, a break above 20,000 after Nvidia's earnings report would support the case of the former.
Nasdaq 100 cash daily chart
![Nasdaq 100 cash daily chart](http://a.c-dn.net/c/content/dam/publicsites/igcom/au/images/News-and-articles/ndx-26aug.png/jcr:content/renditions/original-size.webp)
S&P 500 technical analysis
The S&P 500 is in a similar position. After a significant rebound from the August low and with Nvidia's earnings report and September ahead, we are 50/50 on what might come next.
Specifically, we are uncertain whether the sell-down to the early August low completed a much-needed pullback, with a test and break of the July 5669 high to follow. Or whether the early August sell-off was the first leg of a correction and is missing another leg lower.
A sustained break of support at 5450 after Nvidia's earnings report would suggest the latter scenario. In contrast, a sustained break above 5669 would support the former and could open the way for a move towards 5800.
S&P 500 daily chart
![S&P 500 daily chart](http://a.c-dn.net/c/content/dam/publicsites/igcom/au/images/News-and-articles/spx-26aug.png/jcr:content/renditions/original-size.webp)
- Source: TradingView. The figures stated are as of 26 August 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
![](http://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/ContentImage/Indices global component NA banner.jpg/jcr:content/renditions/original-size.webp)
Take a position on indices
Deal on the world’s major stock indices today.
- Trade the lowest Wall Street spreads on the market
- 1-point spread on the FTSE 100 and Germany 40
- The only provider to offer 24-hour pricing
Live prices on most popular markets
- Forex
- Shares
- Indices