Stocks: Everyone is waiting for Nvidia

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Another Dow record
Stocks climbed higher ahead of Nvidia’s earnings report. THE Dow Jones Industrial Average rose 0.02%, marking its second consecutive record close. THE S&P 500 and Nasdaq Composite both rose 0.16%. Nvidia Shares rose 1.5% as investors looked ahead to the chip giant’s earnings report due on Wednesday. Meanwhile, the yield on the 10-year Fund rose slightly, while US oil prices fell 2.2% on hope Production stopped in Libya it would be temporary.

“The most important stock”
Nvidia he has been unstable lately. The artificial intelligence chipmaker’s market cap has risen ninefold by 2022, briefly making it the world’s most valuable public company. But soon after the stock fell nearly 30% in seven weeks, losing $800 billion in value. The stock has since recovered to within 7% of its all-time high. With quarterly results due on Wednesday, Wall Street is focused on Nvidia’s performance as it could affect the broader market. “It is the most important stock in the world right now,” EMJ Capital’s Eric Jackson told CNBC. “If they lay an egg, it would be a big problem for the whole market. I think they will surprise at the top.” CNBC’s Kif Leswing takes a look what to expect from Nvidia’s earnings.

Asia is mired in a few bright spots
Asia-Pacific markets were mostly down on Wednesday. Australia’s S&P/ASX 200 fell about 0.2% after the country reported a 3.5% year-on-year rise in July’s CPI, above expectations of 3.4%. It’s not all bad in the area, though. JD.com shares rose about 1.4 percent after the Chinese online retailer announced a $5 billion buyback, while Xpeng shares fell nearly 2.3 percent after the Chinese automaker announced a new mass-market car.

Cryptocurrencies stumble
The price of bitcoin is down about 4.2% as of press time to $59,412.14, according to Coin Metrics. Ether fell by around the same percentage to settle at $2,478.88. “Crypto markets fell sharply, causing a leveraged liquidation,” said Steven Lubka, head of private clients and family offices at Swan Bitcoin. “The move appears to have been triggered by a hardware drop from Ethereum, which has been struggling all year against bitcoin.”

Nordstrom is soaring
Nordstrom Shares 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 a share, topping analysts’ estimates, on revenue of $3.89 billion, up 3.4% from a year earlier. Despite the earnings drop, Nordstrom provided cautious guidance for the full year, expecting adjusted EPS between $1.75 and $2.05 and sales ranging from a 1% decline to 1% growth.

[PRO] Renewed confidence in Nvidia
Everyone is waiting with baited breath for Nvidia’s earnings, which will be released on Wednesday after the US markets close. Some fear the company may not be able to sustain its momentum. But Truist Securities, a capital markets firm, just raised Nvidia’s price target.

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

Nvidia has been a key driver of the market’s rally this year, with its shares up 160% despite a recent decline. As the second most valuable US stock, investors are eagerly awaiting its earnings report to see if it can sustain its AI momentum. However, with the shares trading at 37 times forward earnings — above the S&P 500 tech average — there are concerns about whether Nvidia can live up to lofty expectations, especially regarding future guidance.

“Go back to the middle of the year, the S&P was up 15%, five percentage points of that gain was Nvidia aloneScott Chronert, Citi’s U.S. equity strategist, told CNBC. “There’s no question from a benchmark weighting perspective about Nvidia’s importance.” But the market needs to continue to see evidence of AI-enhanced productivity wind turbines, Chronert said, stressing that future guidance will be crucial.

Joseph Moore, semiconductor industry analyst at Morgan Stanley, acknowledges that while competitors such as AMD, Broadcom and Marvell present viable alternatives, of Nvidia execution remains strong. “We expect them to have at least share in 2025 … Those numbers have gotten so big so quickly, I think that’s the biggest risk,” Moore told CNBC. It sees Nvidia maintaining its 90% market share of AI processors.

Going into earnings, Truist Securities analyst William Stein raised his price target for Nvidia, CNBC’s Pia Singh explains why. And CNBC’s Kif Leswing takes a look what to expect from her earnings.

The broader tech landscape is also under scrutiny this week, with gains from Dingle and Salesforce adding to the mixture. August saw a sell-off in the tech sector, but odd comments from Federal Reserve Chairman Jerome Powell helped reverse some of that bearishness.

However, Nomura analyst Naka Matsuzawa cautions that it is stronger than expected Technology gains could challenge the market’s current pricing for rate cuts.

“This week US tech earnings reports will be the main focus, and if the risk of a tech stock crash recedes, this pricing in rate cuts could partially reverse,” 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.