4:19pm: NVIDIA earnings miss ripples through semiconductor sector
The Dow closed Monday up 29 points, less than 0.1%, at 32,833, the Nasdaq Composite slipped 13 points, 0.1%, to 12,644 and the S&P 500 ticked down 5 points, 0.1%, to 4,140.
The benchmarks endured rocky trading after quickly giving up their opening gains.
“The question is if the rally is running out of breadth,” said Angelo Kourkafas, investment strategist at Edward Jones, as reported by CNBC. “There are certainly things that have improved after the past month that would justify, in our view, a move higher, which we have certainly seen. ... However, a lot has to go right to be able to say that the coast is clear.”
One potential reason for the slump is NVIDIA Corporation's quarterly earnings report, in which the company posted revenue of $6.7 billion, well below its previous guidance of $8.1 billion. The company attributed the miss to weakness in gaming, and shares of the company fell more than 6% to $177.93.
That potentially affected others in the semiconductor sector, as Broadcom Inc and Advanced Micro Devices Inc stock lost more than 1% and 2%, respectively.
12.05pm: US stocks ride the see-saw at noon
All three major US indices underwent a number of reversals at midday today, changing from green to red and back.
The Dow Jones Industrial Average was up 0.5% at 32,821 points, the S&P 500 was flat at 4,143, and the Nasdaq Composite was up by 0.4% at 12,662.
Fawad Razaqzada, market analyst with City Index and FOREX.com, noted that the last couple of hours the morning gains have evaporated with technology leading the declines.
Razaqzada said there was no data to trigger the move, but with growth concerns continuing to rise around the world, and the big interest rate rises, there is "little wonder why the bulls are not so keen to trust this rally."
“Granted, it is early days, but if we are still in a bear market trend, then we should ignore these signals at our peril,” Razaqzada said.
“The Nasdaq 100 has turned red on the day after failing to hold the breakout above its bearish trend line. Incidentally, the 38.2% Fibonacci level is also an additional technical factor that is aiding the bearish case,” he added.
9.35am: Meme traders strike again
US stocks opened higher on Monday ahead of a big week of inflation data, with the closely-watched consumer price index (CPI) for July due Wednesday.
Just after the open, the Dow Jones Industrial Average had added 220 points at 33,023 points, the S&P 500 was up 27 points at 4,172 points, and the Nasdaq Composite had gained 90 points at 12,747 points.
In terms of major movers, Bed Bath and Beyond Inc had soared about 45% as meme traders pushed the heavily shorted stock higher for no apparent reason. Other stocks favored by meme traders, AMC Entertainment Holdings Inc and GameStop Corp, had jumped about 18% and 10% respectively.
Palantir Technologies Inc stock tumbled about 13% at the open after the software company reported a 2Q revenue beat but a loss per share of $0.01 compared to the analyst expectation of earnings per share of $0.03.
6.30am: Earnings season continues
US stocks were expected to open higher on Monday, recovering after Friday's mixed reaction to a blow-out US non-farm payrolls figure for July with investors assessing the implications for further interest rate hikes as more corporate earnings roll-in.
Futures for the Dow Jones Industrial Average were trading up 0.2% pre-market on Monday, while those for the broader S&P 500 index were also 0.2% higher, and contracts for the tech-laden Nasdaq-100 added 0.4%.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank commented: "The US economy added 528,000 new non-farm jobs in July, significantly higher than 250,000 expected by analysts. Last month’s data was revised up to 400,000. The unemployment rate fell to 3.5%, the lowest level since late 1960s. Wages grew 5.2% vs 4.9% expected by analysts."
She added: "Strong US jobs data revived the Federal Reserve (Fed) hawks on Friday. The US 10-year yield jumped, and the US dollar gained. Gold gave back a part of gains, and was offered into to the $1,800 mark, as the higher yields increased the opportunity cost of holding the non-interest-bearing gold. US stocks closed in the negative, although the three major US indices closed the first week of August in the positive."
However, Ozkardeskaya noted: "Stocks don’t need good data, they need softer yields, as softer yields push their valuations higher. Since the beginning of July, the S&P 500 recovered more than 10%, while Nasdaq bounced around 17% higher. This was partly due to the better-than-feared earnings reports, but mostly due to the easing US yields on the back of growing recession expectations.
"As such, the market rhetoric went from ‘the Fed is hiking interest rates to fight inflation and that’s bad for the stocks’, to ‘higher rates will push the US economy into recession and get the Fed to slowdown, and maybe to reverse its rate hiking policy’. This shift in expectations had a cooling effect on the US yields, and the softer yields pushed stock prices higher, as lower rates automatically push the stock valuations higher."
On the earnings front, Palantir Technologies, Dominion Energy and Tyson Foods are among the companies due to post results before Wall Street opens on Monday.
Meanwhile, shares of clean-energy companies are primed to benefit from a bill passed Sunday that would funnel hundreds of billions of dollars to climate and healthcare programs. The Senate package still needs to clear the narrowly Democratic House, in a vote scheduled for Friday.
No US data is due on Monday, but investors will be focused on Wednesday's consumer-price index for July which is estimated to show that price pressures have eased on a monthly and annual basis.
Contact the author at jon.hopkins@proactiveinvestors.com