A sign for a Nvidia office building is shown in Santa Clara, Calif., Wednesday, Aug. 7, 2024. (AP Photo/Jeff Chiu)
New York, United States — US and European stock markets largely rose on Thursday as investors shrugged off a drop in shares of chip giant Nvidia and turned their attention back to expectations of lower interest rates.
Frankfurt and the Dow in New York hit new records, while Paris and London also closed higher.
The other main US stock indexes, however, had a mixed showing as Nvidia fell following the tech titan’s earnings report.
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After US markets closed on Wednesday, Nvidia said its sales reached a higher than expected $30 billion in the last quarter, but at a slower pace than before. It also said its profits more than doubled to $16.5 billion.
Nvidia has become a bellwether for the tech sector owing to its huge role in the development of AI chips and its shares have risen more than 150 percent since the start of the year, accounting for a third of the broad-based S&P 500 index’s gains.
Despite the impressive earnings, Nvidia’s shares initially fell by as much as eight percent in after-hours trading Wednesday as some traders had hoped for even better results, and took advantage to lock in profits from its recent gains.
Nvidia shares closed 6.4 percent down in New York on Thursday.
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“Investors have become spoiled, expecting Nvidia not just to meet but obliterate expectations,” said independent analyst Stephen Innes.
Charles Schwab strategist Joe Mazzola said the wider market shrugged off Nvidia’s slump partly because almost all companies reporting earnings recently have beat sales forecasts.
Back to rates
Traders are now focused on a raft of economic indicators that could shed light on the possible size of expected rate cuts by the US Federal Reserve and the European Central Bank next month.
Federal Reserve chief Jerome Powell gave markets a boost last week when he declared that the central bank was ready to finally cut borrowing costs, which sit at a 23-year high.
Government figures showed Thursday that the US economy expanded more than initially thought in the second quarter, growing at an annual rate of 3.0 percent, up from 2.8 percent in an earlier estimate.
The GDP report helped to “reassure investors that the economy is not teetering” on a cliff, said eToro US investment analyst Bret Kenwell.
Despite the revision, “the Fed is unlikely to alter its plans to cut rates at next month’s meeting after Chair Powell made it clear that it’s time to shift policy toward lower rates,” he said.
Other figures Thursday showed US jobless claims fell slightly last week. Investors will next look at the Fed’s favored gauge of inflation on Friday and key jobs data next week.
In Europe, Germany reported the country’s inflation rate slowed to 1.9 percent in August, the lowest in more than three years and within the ECB’s two-percent target.
With Spain also reporting slower inflation and other eurozone countries expected to do the same, “that paves the way for a September rate cut,” said Franziska Palmas, senior Europe economist at Capital Economics.
The Frankfurt DAX reached an intra-day record of 18,936 points, and closed up 0.7 percent at 18,912.57 points.
Earlier in Asia, Tokyo closed flat, Hong Kong rose and Shanghai, Taiwan and Seoul fell.
Asian tech shares were among the worst performers in the wake of Nvidia’s results, with chipmakers taking a hit.
SK Hynix fell more than five percent in Seoul, where Samsung was also down more than three percent.
Taipei-listed TSMC, a key producer of semiconductors, sank more than two percent.
Oil prices jumped after declining in the past two sessions on renewed concerns over Libyan supplies.
Key figures around 2010 GMT
New York – Dow: UP 0.6 percent at 41,335.05 points (close)
New York – S&P 500: FLAT at 5,591.96 (close)
New York – Nasdaq Composite: DOWN 0.2 percent at 17,516.43 (close)
London – FTSE 100: UP 0.4 percent at 8,379.64 (close)
Paris – CAC 40: UP 0.8 percent at 7,640.95 (close)
Frankfurt – DAX: UP 0.7 percent at 18,912.57 (close)
Tokyo – Nikkei 225: FLAT at 38,362.53 (close)
Hong Kong – Hang Seng Index: UP 0.5 percent at 17,786.32 (close)
Shanghai – Composite: DOWN 0.5 percent at 2,823.11 (close)
Dollar/yen: UP at 144.93 yen from 144.50 yen on Wednesday
Euro/dollar: DOWN at $1.1077 from $1.1119
Pound/dollar: DOWN at $1.3170 from $1.3194
Euro/pound: DOWN at 84.11 pence from 84.27 pence
West Texas Intermediate: UP 1.9 percent at $75.91 per barrel
Brent North Sea Crude: UP 1.6 percent at $79.94 per barrel