By ForexTime
This benchmark index, which is widely used to measure the overall performance of the US stock market, has fallen by about 4.8% so far this month.
The S&P 500 also appears headed for its worst monthly performance since December 2022 (down 5.9%), while its previous monthly drop was back in February 2023 (down 2.6%).
Investors hope that artificial intelligence would supercharge corporate earnings for decades to come, even as the technology promises to change our everyday lives.
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And few have benefited from such expectations more than Nvidia.
This chipmaker’s stocks still boast of a 196.3% year-to-date climb, being the best-performing stock on the S&P 500 so far this year, despite having dropped 8.8% from its all-time high set on July 18th.
This chipmaker still has a market cap of over US$ 1 trillion (that’s $1,000,000,000,000), making it the 4th largest stock on the benchmark S&P 500 index.
Nvidia is due to release its latest quarterly results after US markets close on Wednesday, August 23rd.
Markets are currently predicting that this stock could move by 10.2%, either up or down, on Thursday – the day after Nvidia’s earnings release.
Of course, whether this stock climb higher or drops lower depends on the reaction to Nvidia’s financial results last quarter, as well as its forward guidance for future earnings.
Broadly speaking, if Nvidia can convince markets that the AI-hype is truly translating into a meaningful earnings boost, that could help the SPX500_m pare recent losses.
The annual Jackson Hole Economic Symposium, organized by the Kansas City Fed, is set to happen between August 24th – 26th, bringing together the world’s top central bankers, policymakers, and economists.
The highlight is, of course, the speech by Fed Chair Jerome Powell, on Friday, August 25th.
After all, Chair Powell leads the world’s most influential central bank – the US Federal Reserve.
Since 2022, markets have been obsessing over how high the Fed would send US interest rates.
My article this time last year (dated 22 August 2022), in previewing last year’s Jackson Hole symposium, carried these words:
12 months later, yet the same question remains in play.
There’s also an added layer to that question posed in August 2023:
“How long will the Fed maintain its benchmark rates at its peak, before considering a rate cut?”
Here are the market’s current expectations surrounding US interest rates:
As a reminder, Chair Powell’s speech back on 26 August 2022 triggered a 3.4% drop in the S&P 500 on the day.
The benchmark stock index went on to fall by a further 11.85% after the previous symposium concluded, reaching its trough in October, before going on to stage an AI-fuelled rally since (albeit with a pullback so far in August 2023).
It was clear then that traders and investors willingly took to heart Powell’s tough messaging back then about “unusually large” Fed rate hikes.
Although the days of 75-bps Fed rate hikes are now relegated to the past, markets remain primed to react to Powell’s policy signals this week.
And the biggest components of the S&P 500 are Big Tech names such as Apple, Microsoft, Amazon, Alphabet, and of course, Nvidia.
The doji candlestick formed last Friday, August 18th, points to indecision among traders, especially leading into such a week that promises stern test for the US stock market.
This doji could herald a period of price consolidation, or perhaps even the formation of a new trend.
Keeping in mind the looming fundamental catalysts as well was technical setups …
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