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The entire market had a pretty good thing going yesterday following NVIDIA's earnings report. What was so good about it was that the broader market was trading higher even as NVIDIA, dealing with impossibly high expectations, was trading lower.
The good thing, though, became a little less good when selling interest among the mega-cap stocks and semiconductor stocks, as well as in NVIDIA, picked up in the afternoon trade. Even so, the broader market still hung in just fine. The equal-weighted S&P 500 finished the day up 0.4% while the Russell 2000 gained 0.7%.
That was a good showing all things considered and it set a nice tone leading up to the earnings report from several notable companies after the close. In most cases, those reports and the guidance were well received.
That reading of things has translated into handsome gains in pre-market trading for the likes of Dell (DELL), Autodesk (ADSK), lululemon athletica (LULU), Marvell (MRVL), and MongoDB (MDB), which have underpinned the equity futures trade along with some pleasing economic news.
Currently, the S&P 500 futures are up 20 points and are trading 0.4% above fair value, the Nasdaq 100 futures are up 131 points and are trading 0.7% above fair value, and the Dow Jones Industrial Average futures are up 53 points and are trading 0.1% above fair value.
Personal income was up 0.3% month-over-month in July (Briefing.com consensus 0.2%) following an unrevised 0.2% increase in June. Personal spending jumped a healthy 0.5% (Briefing.com consensus 0.5%) following a 0.3% increase in June.
The PCE Price Index was up 0.2% (Briefing.com consensus 0.2%), leaving it up 2.5% year-over-year, unchanged from June. The core-PCE Price Index was up 0.2% (Briefing.com consensus 0.2%), leaving it up 2.6% year-over-year, unchanged from June.
The key takeaway from this report is the recognition that it meshes nicely with the market's prevailing view that the U.S. economy will be able to avoid a hard landing and that the Fed will cut its policy rate because inflation is moving back toward the 2% goal.
By and large, this report was in-line with expectations, so there shouldn't be an outsized response to it. What it should do is drive down expectations for a 50-basis points rate cut at the September FOMC meeting.
The 2-yr note yield, at 3.90% in front of the release, is at 3.93% now, up four basis points from yesterday's settlement. The 10-yr note yield, at 3.86% in front of the release, is at 3.88% now, up one basis point from yesterday's settlement.
The last economic release of the week -- the final August University of Michigan Index of Consumer Sentiment (Briefing.com consensus 67.8; prior 67.8) -- will be out at 10:00 a.m. ET.
As a reminder, U.S. markets will be closed Monday in observance of Labor Day. Enjoy the extended weekend!
