Market Update

By Noel Randewich

(Reuters) – The S&P 500 ended higher on Tuesday, while the Dow Jones reached a record-high close ahead of Nvidia’s quarterly report and upcoming economic data that may provide insights into interest rate cuts.

Tech stocks had a mixed performance, concentrating on Nvidia, the leading chipmaker influencing the AI-related stock rally.

Nvidia shares rose 1.5%, making it the most-traded company in the U.S. stock market, according to LSEG data. With a 159% increase in 2024, Nvidia is perceived as the top beneficiary of AI technology. Its results come amid concerns regarding the growing expenses of competitors like Microsoft and Alphabet.

“There’s a really, really high bar to clear for not just Nvidia’s earnings and guidance, but the story they tell about the state of AI that kind of lifts the tech sector out of its recent funk,” stated Ross Mayfield, an investment strategy analyst at Baird.

Apple shares closed 0.4% higher, whereas Amazon dipped 1.4%.

The S&P 500 climbed 0.16%, ending the session at 5,625.80 points. The Nasdaq also gained 0.16%, reaching 17,754.82 points, while the Dow Jones Industrial Average rose 0.02% to 41,250.50 points, marking its second consecutive record high.

Among the 11 S&P 500 sector indices, six rose, led by information technology up 0.63%, followed by financials with a 0.48% gain.

Tuesday’s data indicated that U.S. consumer confidence hit a six-month high in August while concerns grew about the labor market due to an unemployment rate near a three-year high of 4.3%. Investors anticipate July’s Personal Consumption Expenditure data on Friday for further insights into potential rate cuts.

Traders are now expecting an interest rate cut of either 25 or 50 basis points in September, based on CME Group’s Fed Watch tool.

Additionally, UBS Global Wealth Management increased the likelihood of a U.S. recession from 20% to 25%, citing labor market weaknesses.

Paramount Global fell over 7% after Edgar Bronfman Jr. withdrew his bid for the company, allowing Skydance Media to take control of Shari Redstone’s media empire.

Tesla dropped 1.9% after Canada announced a 100% tariff on imports of Chinese electric vehicles, affecting all EVs shipped from China, including Tesla’s.

Super Micro Computer declined 2.6% after short-seller Hindenburg Research revealed it had a short position in the AI server company.

The PHLX Housing Index was down 1.2% due to data showing a drop in single-family home prices in June as rising mortgage rates impacted demand.

Declining stocks surpassed gaining ones in the S&P 500 by a 1.1-to-one ratio. The S&P 500 recorded 50 new highs and 1 new low, while the Nasdaq saw 62 new highs and 57 new lows.

Trading volume on U.S. exchanges was relatively low, with 8.6 billion shares changing hands compared to an average of 11.9 billion shares over the prior 20 sessions.