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Briefing.com Summary:
*NVIDIA's earnings results were good (and good enough for the broader market).
*Q2 GDP was revised up, aided by an upward revision to consumer spending.
*Initial jobless claims remain at low levels that refute the notion that the labor market is weak.
NVIDIA (NVDA) released its quarterly earnings results after yesterday's close. The AI leader topped consensus EPS and revenue estimates, although there was some consternation about data center revenues, which were up 56% year-over-year, being a bit short of expectations. The company's Q3 revenue guidance was in line with high expectations, and it also announced an additional $60 billion for share repurchases.
All in all, it was a pretty good report. Shares of NVDA, though, are indicated 0.1% lower. That is an almost nothing response for a stock that was up 34% in the three months leading up to its report, which means it is a pretty good response.
The best news perhaps is that NVIDIA's report—and the response to it-- has not upset the broader market. Shy of a big gain after the report, this otherwise neutral response has kept the broader market in a good place. How good? The S&P 500 hit a new all-time high yesterday, and the equity futures trade suggests it will remain near that high watermark when trading begins.
Currently, the S&P 500 futures are up three points and are trading fractionally above fair value, the Nasdaq 100 futures are flat and are trading fractionally above fair value, and the Dow Jones Industrial Average futures are up 58 points and are trading 0.2% above fair value.
Other sources of support include positive responses to earnings reports from Snowflake (SNOW), Pure Storage (PSTG), Best Buy (BBY), Five Below (FIVE), Dollar General (DG), and Agilent (A), and some encouraging economic data.
Q2 GDP was revised up to 3.3% (Briefing.com consensus: 3.0%) from the advance estimate of 3.0%, helped by an upward revision to consumer spending; meanwhile, the GDP Price Deflator held at 2.0% (Briefing.com consensus: 2.0%).
The key takeaway from the report is that the Q2 strength revolved around the decrease in imports (-29.8%), which is a subtraction in the calculation of GDP. The next exports component contributed 4.95 percentage points to Q2 GDP growth versus 4.99 points with the advance estimate.
Separately, initial jobless claims for the week ending August 23 decreased by 5,000 to 229,000 (Briefing.com consensus: 236,000). Continuing jobless claims for the week ending August 16 decreased by 7,000 to 1.954 million.
The key takeaway from the report is that initial jobless claims—a leading indicator-- continue to run at low levels, refuting the notion that the labor market is weak. Granted, the labor market has softened a bit, but it is not weak.
The market's attention from an economic reporting standpoint will now turn to Friday's release of the Personal Income and Spending Report for July, which will contain the PCE inflation data that the Fed watches closely. This report will also be a key driver of Q3 GDP estimates.
The 2-yr note yield is up two basis points to 3.64%, and the 10-yr note yield is down one basis point to 4.23%.
