Updated 4:15 pm EDT
Stocks finished lower Thursday, despite a blowout earnings report from AI chipmaker Nvidia (NVDA) -), amid the start of Federal Reserve's annual meeting in Jackson Hole.
Benchmark 10-year bond yields have been dragged back from their recent 2007 highs to 4.2% as investors eased bets on near-term rate hikes. At last check the yield was 4.228%.
Nvidia, which posted better than expected second-quarter earnings, said it saw current-quarter revenue in the region of $16 billion, well ahead of Wall Street forecasts, and cited "tremendous" demand for its products heading into the back half of the year and beyond.
The company sits at the epicenter of the world's hottest new technology with a commanding market share lead in supply of AI-related semiconductors. Shares finished slightly higher.
Splunk (SPLK) -) finished up 12.9% after the data-focused cloud computing company beat Wall Street's second-quarter earnings expectations.
The company reported adjusted earnings per share of 71 cents in the second quarter on revenue of $910.6 million. Analysts expected adjusted profit of 46 cents a share on revenue of $889.2 million.
Meanwhile, Petco (WOOF) -) shares tumbled 20% after the pet food, products and services company affirmed its full-year revenue estimate at a range of $6.15 billion to $6.28 billion and cut its earnings estimate to a range of 24 cents to 30 cents a share from a range of 40 cents to 48 cents.
Chief Financial Officer Brian LaRose cited a "shift in consumer spending and pressures on our discretionary business."
Dollar Tree (DLTR) -) nearly 13% after the discount retailer's earnings report highlighted margin pressures.
Wireless carrier T-Mobile (TMUS) -) said it was laying off 5,000 employees, or about 7% of its workforce, as the company contends with rising costs related to adding more subscribers in a competitive market. Shares ended down 2.2%.
Federal Reserve convenes at Jackson Hole
Investors will also look to the start of the Fed's annual summit in the resort town of Jackson Hole, Wyo,, where officials are set to discuss this year's theme – "Structural Shifts in the Global Economy" – amid surging domestic growth at home but fading prospects in major rivals around the world.
Chairman Jerome Powell is slated to speak at 10:05 a.m. Eastern time on Friday.
"There is considerable attention on this speech and whether the Fed is set to deliver major long term policy hints, far more than any anticipation around whether Powell is set to offer strong hints on the near-term course of policy," Saxo Bank strategists wrote.
At present, traders are betting the Fed will hold its benchmark lending rate steady at between 5.25% and 5.5% when it meets next month in Washington, with bets on a final rate hike of the year in November pegged at around 40.5%.
Durable goods orders, which includes appliances, computers, cars and other manufactured goods, decreased 5.2% in July from a month earlier to a seasonally adjusted $285.9 billion, the Commerce Department said.
Initial jobless claims decreased by 10,000 to a seasonally adjusted 230,000 for the week ended Aug. 19, the Labor Department said. The previous week's level was revised up modestly by 1,000.
Economists polled by Reuters had forecast 240,000 claims for the latest week.
“Jobless claims will be noisy for the next few releases because of the impact of Tropical Storm Hilary,” said Bill Adams, chief economist for Comerica Bank. “Durable goods orders fell in July due to lower orders for aircraft.”
Adams said the economy was operating with a small margin of slack, adding that “the path is clearing for inflation to get back to the Fed’s target without the central bank pushing the economy into recession.”
The S&P 500 closed down 59 points or 1.35%, while the Dow Jones Industrial Average fell 373 points, or 1.08%. The tech-focused Nasdaq lost 257 points, or 1.87%.
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