Wall Street faces a twin set of potentially game-changing events this week as investors gauge market performance over the final months of the year amid a downturn in U.S. stocks and concern about the fate of China's sputtering post-covid recovery.
Chipmaker Nvidia (NVDA) -), which published blowout quarterly earnings in late May and effectively kickstarted the rally in AI-related stocks worldwide, will publish its fiscal-second-quarter update after the close of trading on Wednesday. Investors are looking for the sector's 'kingmaker' to report a bottom line of $2.07 a share on revenue of $11.13 billion.
Earlier this spring Nvidia forecast current-quarter revenue of around $11 billion, more than 50% ahead of Wall Street estimates, with a gross margin of around 70%, which equates to earnings in the region of $2.04 a share.
The group's near-term sales outlook, however, will be crucial in determining whether companies are putting real investment dollars into their much-hyped AI strategies.
Second Pivotal Event: Fed's Powell at Jackson Hole
The second pivotal event is slated for Friday with Federal Reserve Chairman Jerome Powell scheduled to speak at the central bank's annual retreat in Jackson Hole, Wyoming.
Investors will be looking for direction from Powell with respect to the Fed's near-term rate plans, particularly in light of the resilient U.S. economy, which the Atlanta Fed suggests is growing at a 5.8% clip. That's more than twice the pace of the 2.4% growth recorded over the three months ended in June.
At last year's Jackson Hole summit, Powell warned that the rate hikes needed to tame inflation, which was then running at more than 8%, would require "some pain" for American consumers. Since then, however, headline CPI has fallen to 3.2%, the unemployment rate has retreated to a five-decade low of 3.5% and the economy has continued to outpace its global rivals.
The calendar-second-quarter earnings season will also wind up this week, with 12 S&P 500 companies reporting over the next five days, including retailers Lowe's (LOW) -), Macy's (M) -), Kohl's (KSS) -), Dollar Tree (DLTR) -), Nordstrom (JWN) -) and Gap (GPS) -).
With 472 companies in the S&P 500 reporting so far, collective earnings are set to fall 3.4% from a year earlier to a share-weighted $449.8 billion. That total is likely to rebound over the third quarter, however: Earnings are expected to rise 1.3% to a $46.2 billion over the three months ending in September.
On the data side, markets will digest existing-home sales for the month of July on Tuesday, with new-home sales and mortgage data expected on Wednesday. Weekly jobless claims data is slated for Thursday at 8:30 a.m. U.S. Eastern.
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