Stock Market: Everyone is waiting for Nvidia

This report is from today’s CNBC Daily Open, our international market newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. As you see? You can subscribe here.

Another Dow record
Shares were higher ahead of Nvidia’s earnings report. The Dow Jones Industrial Average rose 0.02%, marking its second consecutive record high. The S&P 500 and Nasdaq Composite both rose 0.16%. Shares of Nvidia rose 1.5% as investors looked ahead to the chip giant’s expected earnings release on Wednesday. Meanwhile, the yield on the 10-year Treasury rose slightly, while US oil prices fell 2.2% on hopes of a temporary halt in Libyan production.

‘The most important stock’
Nvidia has been volatile of late. The AI ​​chipmaker’s market capitalization has increased ninefold since 2022 and briefly became the world’s most valuable public company. But after the stock fell nearly 30% in seven weeks, it lost $800 billion in value. The stock has since rebounded to 7% from its all-time high. With quarterly results on Wednesday, Wall Street is focused on Nvidia’s performance, as it could impact the broader market. “This is the most important stock in the world right now,” Eric Jackson of EMJ Capital told CNBC. “If they lay eggs, it will be a major problem for the whole market. I think they want to surprise to rise.” CNBC’s Kif Leswing looks at what to expect from Nvidia’s earnings.

Asia is down on some bright spots
Asia-Pacific markets generally fell on Wednesday. Australia’s S&P/ASX 200 fell 0.2% after the country reported a 3.5% year-on-year rise in July CPI, above the 3.4% expected. However, not all is bad in the area. JD.com shares rose about 1.4% after the Chinese online retailer announced a $5 billion buyback, while Xpeng shares rose close to 2.3% after the Chinese automaker announced a new mass-market car.

Cryptocurrencies stumble
The price of bitcoin fell by around 4.2%, at the time of publication, to $59,412.14, according to Coin Metrics. Ether fell by the same percentage to $2,478.88. “Crypto market moved down a lot, triggering leverage liquidation,” said Steven Lubka, head of private clients and family office at Swan Bitcoin. “The move appears to have started with a material decline by Ethereum, which has been struggling all year against bitcoin.”

Nordstrom is on the rise
Shares of Nordstrom rose more than 7% in extended trading after the retailer posted earnings that beat Wall Street expectations. The retailer reported adjusted earnings of 96 cents per share, above analysts’ estimates, on revenue of $3.89 billion, up 3.4% from a year ago. Despite the profit, Nordstrom provided cautious full-year guidance, expecting adjusted EPS between $1.75 and $2.05 and sales of a 1% to 1% decline.

(PRO) New confidence in Nvidia
Everyone is waiting with bated breath for Nvidia’s earnings, which come out Wednesday after the US market closes. Some fear the company may not be able to maintain momentum. But Truist Securities, a capital markets firm, just raised its price target on Nvidia.

While the S&P 500 is within touching distance of a record high, the PHLX Semiconductor index remains more than 14% below its all-time high, with many components in bear market territory. As CNBC’s Fred Imbert writes, many investors are questioning the sustainability of the recent rally.

Nvidia has been the main driver of this year’s market rally, with shares up 160%, despite recent declines. As the second most expensive US stock, investors are waiting for the earnings report to see if AI can maintain its momentum. However, with the stock trading at 37 times forward earnings — above the S&P 500 technology average — there are concerns about whether Nvidia can meet lofty expectations, especially regarding future guidance.

“Going back to the middle of the year, the S&P was up 15%, five percentage points of that gain was Nvidia alone,” Scott Chronert, Citi’s US equity strategist, told CNBC. “There is no question from a fundamental index weighting perspective that Nvidia is important.” However, the market should continue to see evidence of AI productivity-enhancing tailwinds, Chronert said, suggesting that future guidance will be important.

Joseph Moore, a semiconductor industry analyst at Morgan Stanley, acknowledged that while competitors like AMD, Broadcom and Marvell offer viable alternatives, Nvidia’s execution remains strong. “We expect to at least have a stock in 2025 … The numbers are growing so fast, I think there’s a greater risk,” Moore told CNBC. They see Nvidia retaining a 90% market share of AI processors.

In response to earnings, Truist Securities analyst William Stein raised his price target for Nvidia, CNBC’s Pia Singh explains why. And CNBC’s Kif Leswing looks at what to expect from earnings.

The broader technology landscape was also under scrutiny this week, with earnings from Dell and Salesforce adding to the mix. August saw the tech sector sell off, but Federal Reserve Chairman Jerome Powell’s dovish comments helped reverse some of the decline.

However, Nomura analyst Naka Matsuzawa cautioned that stronger-than-expected technology earnings could challenge the current market price of rate cuts.

“This week’s earnings reports from US tech companies will be the main focus, and if the risk of a fall in tech stocks subsides, the price of this rate cut could be partially reversed,” he wrote in a Monday note.

– CNBC’s Lisa Kailai Han, Brian Evans, Fred Imbert, Arjun Kharpal, Kif Leswing, Annika Kim Constantino, Gabrielle Fonrouge, Pia Singh, Spencer Kimball and Yeo Boon Ping contributed to this report.