Stocks Waver in Thin Trading Before Nvidia Reports: Markets Wrap

(Bloomberg) — Stocks posted small moves as investors held off making decisions before Nvidia Corp. earnings and US inflation data later in the week.

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US equity futures edged higher. Europe’s Stoxx 600 Index added 0.3% as mining stocks led gains. Trading volumes were low, with activity on most European benchmarks about half of the average level from the past 30 days. Treasuries and the dollar were also steady.

The stakes are high ahead of Nvidia, which reports on Wednesday, especially after an earnings season that showed disappointing results for other “Magnificent Seven” megacaps. Investors will also be watching data on US economic growth and inflation later in the week. In Asia, further evidence of a slowdown in China weighed on investor sentiment.

Nvidia’s “numbers will be good but what matters is the guidance in order to understand if the demand is still healthy,” said Alberto Tocchio, a portfolio manager at Kairos Partners. “If we get bad news, the rotation will be ever stronger as the market is still very heavy on the mega-cap.”

The heft of Nvidia, which has the second-biggest weighting in the S&P 500 after Apple Inc., and its heady valuation mean that it’s susceptible to big swings that could reverberate widely. Pricing in the options market shows that traders see the potential for an almost 10% move in either direction after earnings, which would translate to roughly 160 points in the Nasdaq 100 Index, or a 0.8% move, according to data compiled by Bloomberg.

Read: What a September Cut Could Mean for the Economy and the Election

Among individual stocks in US premarket trading, Paramount Global fell after the CBS parent said it’s moving ahead with asset disposals. Nvidia shares edged higher.

In Europe, Associated British Foods Plc declined as Deutsche Bank cut its rating on the stock to sell from hold. Ryanair Plc led gains in European airline and travel stocks after CEO Michael O’Leary said a softening in fares experienced between April and June has levelled out. Bunzl Plc shares soared after the distribution group raised its full-year profit guidance.

Meanwhile, Fed Bank of San Francisco President Mary Daly said it’s appropriate to begin cutting rates, while her Richmond counterpart Thomas Barkin said he still saw upside risks for inflation, though he supported “dialing down” rates.

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Economists see the personal consumption expenditures price index excluding food and energy — the Fed’s preferred measure of underlying inflation — rising 0.2% in July for a second month. That would pull the three-month annualized rate of so-called core inflation down to 2.1%, a smidgen above the central bank’s 2% goal.

“Powell sealed the deal for a September cut at Jackson Hole — leaving intact our thesis for continued broadening/rotation,” said Ohsung Kwon at Bank of America Corp. “But don’t sleep on Nvidia earnings, a consistent driver of S&P returns and still a risk to markets if they disappoint.”

Key events this week:

• US Conference Board consumer confidence, Tuesday

• Nvidia earnings, Wednesday

• Fed’s Raphael Bostic and Christopher Waller speak, Wednesday

• Eurozone consumer confidence, Thursday

• US GDP, initial jobless claims, Thursday

• Fed’s Raphael Bostic speaks, Thursday

• Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday

• Eurozone CPI, unemployment, Friday

• US personal income, spending, PCE; consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.3% as of 10:03 a.m. London time

• S&P 500 futures were little changed

• Nasdaq 100 futures rose 0.1%

• Futures on the Dow Jones Industrial Average were little changed

• The MSCI Asia Pacific Index fell 0.2%

• The MSCI Emerging Markets Index fell 0.3%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.1171

• The Japanese yen fell 0.3% to 144.97 per dollar

• The offshore yuan was little changed at 7.1299 per dollar

• The British pound rose 0.3% to $1.3225

Cryptocurrencies

• Bitcoin fell 1% to $62,790.52

• Ether fell 0.2% to $2,684.29

Bonds

• The yield on 10-year Treasuries advanced two basis points to 3.83%

• Germany’s 10-year yield advanced two basis points to 2.27%

• Britain’s 10-year yield advanced eight basis points to 3.99%

Commodities

• Brent crude fell 0.5% to $81.03 a barrel

• Spot gold fell 0.3% to $2,511.28 an ounce

This story was produced with the assistance of Bloomberg Automation.

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