4:15pm: Treasury yields remain in focus
The Dow closed Tuesday down 175 points, 0.5%, at 34,288, the Nasdaq Composite added 8 points to 13,506 and the S&P 500 dipped 12 points, 0.3%, to 4,388. The small-cap Russell 2000 index lost 5 points, 0.3%, to 1,851.
Investors continue to cautiously eye US Treasuries after the 10-year yield hit its highest level since 2007 on Monday.
“I think [the market] is kind of wavering right now as the 10-year yield is hovering right around those October highs,” Adam Turnquist, chief technical strategist at LPL Financial said. “We’re watching for an official breakout on the 10-year ... I think if we start moving higher, that’s certainly a warning sign for maybe a little bit deeper pullback in equity markets.”
Meanwhile, traders are looking ahead to Federal Reserve Chairman Jerome Powell’s speech at the Kansas City Fed’s annual economic symposium in Jackson Hole this Friday.
12pm: Nasdaq still ahead but banks weigh on the Dow
The Dow Jones Industrial Average (DJIA) had retreated by midday on Tuesday, while the S&P 500 also shed its early gains to leave the Nasdaq as the outlier as tech stocks continued their advance.
Shares of banks came under pressure after S&P Global Ratings cut its credit ratings and outlook on several regional US banks, which have been forced to pay out higher interest rates, while a decline in deposits has resulted in a liquidty squeeze.
While shares of Nvidia retreated ahead of results from the chipmaker on Wednesday, artificial intelligence (AI) continued to find favor.
“The starting gun being fired on the IPO of Nvidia’s peer ARM on Nasdaq, having snubbed London as a listing destination, may help provide further fuel for the momentum behind the artificial intelligence story," commented AJ Bell investment director Russ Mould.
By noon, the DJIA was down 129.9 points, 0.4%, at 34,333.8, the S&P 500 was 5.5 points, 0.1%, lower at 4,394.1, but the Nasdaq Composite was up 29.2 points, 0,2%, at 13,526.8.
9:40am: Tech shines but Macy's and Dick's Sporting Goods suffer
The Nasdaq and S&P opened higher, extending Monday's gains, but it was a bad start for two well-known retail names.
Shortly after the opening bell, the Dow Jones Industrial Average was up 21.63 points, 0.1%, at 34,485.32, the S&P 500 was up 12.05 points, 0.3%, at 4,411.82 and the Nasdaq Composite was up 61.53 points, 0.5%, at 13,559.12.
The renewed enthusiam for tech stocks was in part fuelled by increased appetitie as Softbank's semiconductor unit Arm filed for what is set to be this year’s largest US initial public offering.
Susannah Streeter at Hargreaves Lansdown said: "The obsession with all things AI is still super-strong and the semi-conductor designer (ARM) will be using AI as its calling card to entice investors as it heads towards the launch."
In company news, shares in Dick’s Sporting Goods plummeted 24% after it cut its profit outlook for the year as the athletic goods retailer deals with a rise in thefts.
Chief executive Lauren Hobard said quarterly “profitability was short of our expectations due in large part to the impact of elevated inventory shrink, an increasingly serious issue impacting many retailers”.
Also retailer in the news was the owner of Bloomingdale's, Macy's Inc., which fell 6.0% despite better-than-expected second quarter results.
Group revenue of $5.13 billion fell 8%, but beat analysts’ projections, while “other” revenue dropped from a year ago due to a “faster than expected” jump in credit card delinquencies during the second quarter.
The firm was also in cautious mood looking ahead, holding guidance but highlighting the tough macro backdrop.
Housing data is due later in the session while a number of Federal Reserve officials are due to speak as the markets looks ahead to Jackson Hole, which will be addressed by Fed chair Jerome Powell.
6:58am: Nasdaq set to extend rally after bumper Monday
Wall Street looks set for to open higher on Tuesday with tech stocks leading the charge building on Monday’s gains.
In pre-market trading, futures for the Dow Jones Industrial Average were 0.2% higher, while those for the S&P 500 rose 0.4%, and contracts for the Nasdaq 100 futures were up 0.6%.
The Nasdaq Composite posted its biggest advance of the month during Monday’s main trading session, rising 1.6%, led by Nvidia’s 8.5% gain.
The chip maker reports results on Wednesday and it looks as though investors are betting on another blow away quarter.
Sentiment around semiconductor stocks was also boosted by the release of British chip designer Arm’s Nasdaq listing prospectus, starting the countdown to the biggest US initial public offering in almost two years.
Interestingly, the rate sensitive tech sector rose despite another jump in the yield on the 10-year Treasury which reached its highest level since November 2007.
Deutsche Bank's Jim Reid feels with investors continuing to expect higher rates for longer, "this period feels increasingly reminiscent of the early 2010s in reverse."
He explains: "Back then after the GFC, policy rates had been slashed to zero by central banks, but there was always the expectation that rate hikes were never too far away."
"Yet in reality, they kept being pushed out year after year."
"Today, it feels like the same process is happening again, except with rate cuts this time, which are also being pushed out ever further into the future."
"For instance, the first rate cut from the Fed is now priced in for May 2024, but that timing has continued to move into the distance.
Elsehwere, attention will switch to events at Jackson Hole, where the Federal Reserve chair Jerome Powell will speak Friday.
Joshua Mahoney at Scope Markets explains: “The Federal Reserve starts to take on a more prominent role today, with comments from Barkin, Goolsbee, and Bowman laying the groundwork for Powell’s Jackson Hole appearance.”
“Markets continue to feel that a September hike is largely unlikely, with just a 13% chance attributed to such a move.”
“However, with markets pricing in a 43% likeliness of a November hike, we could see some dollar volatility if Powell or his colleagues opt to shift the tone this week,” he said.
In other corporate news, Zoom Video Communications Inc (NASDAQ:ZM) looks set to live up to its name with shares flying 4.3% to the good after well received results after the market close Monday.
Zoom posted earnings of $1.34 per share, well above expectations of $1.05 per share, on revenue of $1.14 billion, compared to expectations of $1.12 billion.
For other moves and shakers in the US take a look here.
Elsewhere, look out for results from do-it-yourself hardware retailer Lowe’s and department store Macy’s, while existing home sales data will be reported by The National Association of Realtors.