US Stocks Experience Heavy Losses as Nvidia’s Strong Q2 Performance Fails to Sustain Optimism
US stocks plunged on Thursday after an initial surge of optimism faded, despite tech giant Nvidia’s impressive second-quarter results. The Dow Jones Industrial Average dropped 1.1% to 34,099, the S&P 500 declined 1.4% to 4,376, and the Nasdaq slumped 1.9% to 13,464.
Nvidia, a leader in artificial intelligence computing, reported an astounding 88% rise in revenue to $13.5 billion, surpassing the estimated $11.2 billion. The company’s earnings per share also soared by 148% to $2.70, beating the projected $2.09. Additionally, Nvidia revealed expectations of earning $16 billion in the third quarter, surpassing analysts’ predictions by $3.4 billion. The company even added $25 billion to its stock buyback program.
Despite these impressive figures, Nvidia’s stock price only increased by a marginal 0.1%. This lackluster response is particularly surprising considering the stock had already surged by 229% in 2023 and experienced an additional 11% increase in the last five days alone. Currently, Nvidia’s shares are trading at a record closing high of $471.63.
While Nvidia’s performance failed to maintain investor optimism, the overall stock market was also impacted by caution ahead of the Jackson Hole Economic Symposium. This three-day conference hosted by the Federal Reserve provides insights into potential changes in monetary policy. Investors are eagerly awaiting Federal Reserve Chair Jerome Powell’s speech on Friday for further guidance.
The release of economic data further contributed to the market volatility. The labor market showed signs of strength, with initial claims for jobless benefits totaling 230,000, lower than the forecasted 240,000. However, durable-goods orders declined by 5.2% in July, worse than anticipated, marking the steepest rate of decline since 2020. Excluding automobiles and planes, orders would have seen a slight increase of 0.5%.
Amidst the turbulent market conditions, Boeing also faced challenges as it announced manufacturing flaws in its 737 Max, leading to delayed deliveries. Conversely, retailer Guess exceeded expectations, reporting an 85% year-on-year increase in adjusted earnings per share and providing an upbeat outlook for the rest of the year. As a result, Guess’s stock price surged by 26%.
In summary, US stocks experienced significant losses as faith in tech giant Nvidia’s outstanding quarterly results quickly dissipated. As the market eagerly awaits insights from the Jackson Hole Economic Symposium, analysts speculate on the future of monetary policy. Despite robust economic data in some areas, the manufacturing sector faced setbacks. Investors will closely monitor upcoming speeches by Federal Reserve Chair Jerome Powell for further clarification. Amidst these uncertainties, individual stocks such as Boeing and Guess demonstrated mixed outcomes, highlighting the volatility of the market.
