In a noteworthy development for financial markets, the Dow Jones Industrial Average concluded at a record high on Thursday, with traders closely monitoring the latest economic indicators and corporate performance, particularly those from Nvidia (NVDA). The Dow advanced by 0.6%, reaching a peak of 41,335.1, while the Nasdaq Composite experienced a slight decline of 0.2%, settling at 17,516.4.
In contrast, the S&P 500 remained relatively stable at 5,592. Within the sectors, energy witnessed the most significant gains, while technology experienced the steepest downturn. On the economic front, the U.S. real gross domestic product exhibited a robust growth rate of 3% on an annualized basis for the second quarter, a notable increase from the previously anticipated rate of 2.8%, according to a revised estimate by the Bureau of Economic Analysis.
Notably, the consensus forecast on Bloomberg had also projected a growth rate of 2.8%. Market experts suggest that we might be encountering a 'Goldilocks scenario' where the economic growth is expected to gradually taper off in the latter half of the year. This trend would ideally bring inflation rates closer to the Federal Reserve's target of 2%.
TD Economics highlighted in a client note that such conditions could facilitate the Federal Open Market Committee in implementing a reduction in interest rates by at least 75 basis points before the year concludes. In a positive sign for the labor market, weekly unemployment insurance applications have declined, as revealed by government data.
Oxford Economics has indicated that layoffs remain at minimal levels, providing a balm to the U.S. economic narrative. Despite expectations for a rate cut by the Federal Reserve in September to mitigate potential labor market vulnerabilities, current claims data does not support the need for a reduction exceeding 25 basis points, according to insights from a brokerage firm. Turning to the housing market, pending home sales in the U.S.
saw a decline last month, marking the lowest reading since records began in 2001, as reported by the National Association of Realtors. This downward trend in home sales further illustrates the challenges facing the housing sector amid fluctuating economic conditions. In the bond market, the U.S. two-year yield saw an uptick of 3.1 basis points, reaching 3.9%, while the 10-year rate added 2.4 basis points, climbing to 3.87% on Thursday. In corporate news, Nvidia, a leading chip manufacturer, surpassed Wall Street estimates in its fiscal second-quarter results.
The surge in demand for generative artificial intelligence solutions has substantially bolstered the company’s revenue, though its shares fell by 6.4%, marking one of the steepest declines on both the S&P 500 and the Nasdaq. Nvidia's projection for third-quarter consolidated revenue stands at $32.5 billion, with a margin of plus or minus 2%.
While this estimate exceeds Street projections, it falls short of the $33 billion to $34 billion range many investors had anticipated, according to UBS Securities. In contrast, shares of Best Buy (BBY) soared by 14%, leading the S&P 500 gainers after the electronics retailer raised its full-year earnings forecast following unexpectedly strong fiscal second-quarter results.
Cooper Companies (COO) emerged as the second-best performer, climbing nearly 12% due to better-than-anticipated fiscal third-quarter results. In a starkly different scenario, Dollar General (DG.US) shares plummeted by 32%, becoming the worst performer on the S&P 500 after the discount retailer revised its full-year outlook downward in response to softening sales trends.
Dollar General’s fiscal second-quarter results disappointed market estimates, reflecting ongoing challenges in its performance. Moreover, Dollar Tree (DLTR) shares fell by 10%, accounting for the second-steepest decline on the S&P 500 and the most significant drop on the Nasdaq. On the commodities front, West Texas Intermediate crude oil prices increased by 1.9%, reaching $75.92 per barrel, amidst ongoing supply concerns related to Libya, as noted by D.A.
Davidson. Meanwhile, gold prices experienced a rise of 0.7%, reaching $2,554.30 per troy ounce, with silver gaining 0.6% to settle at $29.81 per ounce. Overall, the market dynamics remain fluid, influenced heavily by economic growth rates and corporate earnings reports, shaping investor sentiment and market trajectories..