After the hesitation in the last meetings amidst the anticipation of The NVDA Market sentiment settles in as earnings rise. Index futures were higher in early trading. Nvidia shares have recouped some of their losses from the beginning of the premarket session and could rebound as sell-side analysis comes in. Some strong tech earnings could have the offsetting effect.

Preliminary GDP data due before the market opens will be analyzed by traders for clues on growth and inflation. A speech by a Federal Reserve official is also on traders’ radar. More importantly, Friday’s data on the consumer price and spending index, considered the Fed’s favorite inflation indicator, could keep the market on tenterhooks. Labor Day on Monday could dampen trading volumes and this could create volatility, although traders are not placing much importance on low-volume moves.

In premarket trading on Thursday SPDR S&P 500 ETF Trust SPY rose 0.20% to USD 559.41, and the Invesco QQQ ETF QQQ rose 0.25% to $472.53, according to Benzinga Pro data.

Notes from the last meeting

Beware of Nvidia’s earnings figures and a sharp decline in shares of Super Micro Computers, Inc. SMCI weighed on the technology sector on Wednesday, which in turn dragged down the major indexes on Wednesday. After a lackluster start, stocks moved sideways in early trading and then declined before recouping some of the losses in late afternoon trading.

The tech-heavy Nasdaq Composite traded at its lowest in about two weeks and the Dow Jones Industrial Average fell from its all-time high at the close.

With two exceptions, all S&P 500 sector classes declined on Wednesday, with IT, communications services, consumer discretionary and energy stocks bearing the brunt of the selling pressure.

Analyst insights:

As the presidential election campaign enters its final stretch, Michael ZezasManaging Director, Head of US Public Policy Research & Municipal Credit Strategy at Morgan Stanley, said before the election that it is likely that the economic cycle, rather than the ups and downs of the campaign, will influence the markets. “We do not believe that investors’ short-term strategies will be focused on the election,” he said.

After the election, Zezas said he expected the election’s impact to be more pronounced in certain sectors. A Democratic victory could be negative for energy and telecom stocks, but positive for clean energy stocks, he said.

“The election outcome could affect the U.S. Treasury yield curve, which tracks bond yields versus maturity dates, as well as the U.S. dollar,” he said. Trump’s hint of higher tariffs will likely weigh on economic growth and lead to a steeper yield curve, but it would be positive for the dollar, he added.

Chief Economist at LPL Financial Jeffrey Roach said if the economy worsens, the stock market could see volatility. The August payroll report due Sept. 6 or reports in the coming months could show some underlying weakness in overall hiring trends. He also noted that consumers are cautious and may not splurge on expensive items given the economy’s late-cycle dynamics.

LPL said it maintained its investment view of being slightly overweight fixed income and funded by cash, which could help cushion equity market volatility if economic conditions worsen, while also providing attractive returns, the company said.

Upcoming economic data

• The Labor Department will release the weekly jobless claims report at 8:30 a.m. EDT. The number of people who filed for unemployment benefits for the week ending August 24 is expected to be 230,000, down slightly from the 232,000 filed the previous week.
• The Bureau of Economic Analysis will release preliminary (second) second-quarter GDP data at 8:30 a.m. EDT. Economists on average expect annualized quarter-on-quarter growth to remain unchanged at 2.8%, compared to 1.4% growth in the first quarter. Traders may also focus on the personal consumption expenditures index and the GDP price deflator, which are considered inflation measures.
• The National Association of Realtors is scheduled to release its July home sales index at 10 a.m. EDT. The consensus is for a monthly increase of 0.2 percent, compared to growth of 4.8 percent in June.
• The Treasury Department will auction four- and eight-week notes at 11:30 a.m. EDT and seven-year notes at 1:00 p.m. EDT.
• President of the Atlanta Fed Raphael Bostic will make a public appearance at 3:30 p.m. EDT.

See also: Best Futures Trading Software

Stocks in focus:

• Nvidia fell 1.77% in premarket trading as traders pushed the stock lower following the company’s quarterly earnings release. Other chipmakers also reacted with the stock.
• Other stocks moving on earnings are Affirm Holdings, Inc. AFRM (up 22%), Cooper Companies, Inc. COO (plus 4.70%), CrowdStrike Holdings, Inc. CRWD (down 2%), Five Below, Inc. FIVE, HP Inc. HPQ (up 7%), Nutanix, Inc. NTNX (up 17%), NetApp, Inc. NTAP (down 2.7%), Octa, Inc. OKTA (down 10.50%), For more information, visit: Pure Storage, Inc. PSTG (down over 13%), Salesforce, Inc. CRM (plus 5%) and Victoria’s Secret & Co. VSCO (plus over 5%).
• American Eagle Outfitters, Inc. AEO, Best Buy Co., Inc. BBY, Burlington Stores, Inc. BURL, Campbell Soup Company CPB, Dollar General Corporation DG And Ollie’s Bargain Outlet Holdings, Inc. OLLY are among the most important companies that announce their earnings before the stock market opens.
• Persons reporting after the market close include Microsoft Corporation ADSK, Dell Technologies Inc. dELL, Gap, Inc. GPS, Lululemon Athletica Inc. LULU, Marvell Technology, Inc. MRVL, MongoDB, Inc. MDB And Ulta Beauty, Inc. ULTA.

Commodities, bonds and global stock markets:

Crude oil and gold futures recovered after a two-day decline and Bitcoin BTC/USD was trading below the $60,000 mark. The yield on the 10-year Treasury note fell 1.4 basis points to 3.827%.

Most Asian markets declined on Thursday following Wall Street weakness overnight and negative reaction to Nvidia’s earnings, while European stocks traded higher earlier in the session.

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