Nasdaq Index and S&P500: Nvidia Guidance Takes Over After Mixed PCE

The S&P 500 closed nearly unchanged Wednesday. PCE inflation landed mixed with the core holding where the street expected it to, while headline PCE ran hotter. Neither side got the clean read it wanted.

Meta settled a major lawsuit and gave back most of its premarket rally. Nike and Dick’s Sporting Goods dragged the consumer side lower.

Nvidia reports after the close. Warsh at Jackson Hole on Friday.

The S&P 500 settled at 7,675.70. The Nasdaq Composite finished at 26,130.20, down 0.08%. The Dow Jones Industrial Average lost 113.52 points, or 0.21%, to close at 53,463.88.

PCE Did Not Give Growth Stocks the All-Clear

Headline PCE rose 0.2% in July. The yearly rate came in at 3.7%. Both readings ran 0.1 percentage point above expectations. Core PCE rose 0.2% for the month. Yearly core held at 3.3%, matching the forecast.

Core stopped the sellers. Headline kept the buyers from committing. The 10-year yield finished near 4.649%. The 30-year held near 5.17%. Those are still restrictive levels for a market priced around heavy AI spending, higher earnings and eventual Fed relief. Tuesday’s pullback in the long bond helped stocks stabilize. Wednesday’s PCE did not push yields lower again.

Nvidia Reports After the Close With the Spending Cycle on Trial

Nvidia reports second-quarter earnings after the bell. The street expects $2.09 per share on $92.28 billion in revenue.

Nvidia is the largest company in the S&P 500 with a market value above $5 trillion. The chip group bounced Tuesday after a seven-session losing streak. The bounce came before the number. Wednesday is where the market finds out if it wants to keep it.

A solid quarter may hold the stock together. Strong guidance could put the bid back under the chip group and the Nasdaq. Nvidia has to carry the technology side without help from the bond market.

Meta Settled for $16.7 Billion and the Stock Gave Back Its Premarket Rally

Meta finished about 1% higher after agreeing to pay $16.7 billion to settle claims that Facebook and Instagram harmed young users. The settlement is just another large bill on top of the AI spending Meta is already committed to.

Stocks in the News

Nike fell more than 2% after Truist cut the stock to hold. Shares are down nearly 40% this year and more than 75% from the 2021 high. Dick’s Sporting Goods plunged 31% Tuesday after cutting its outlook on aggressive promotions that hurt margins. Nike makes up an estimated 35% to 40% of Dick’s merchandise purchases. Goldman Sachs kept its buy rating on Dick’s and cut the target to $170 from $271.

GoDaddy dropped after Wells Fargo downgraded the stock on concerns that AI-driven search is pulling customers toward cheaper domain alternatives.

Daily S&P 500 Index (SPX) Technical Analysis

The S&P 500 Index finished higher on Wednesday, but remained inside the August 20 trading range at 7639.01 to 7699.96. This particular chart pattern is often a precursor to volatility.

A breakout over 7699.96 will be a sign of strength. The first target will be a minor pivot at 7727.86. Overtaking this will indicate the buying is getting stronger, putting the record high at 7816.70 back on the radar.

If 7639.01 fails as support, the next target is likely to be the former record high at 7620.90. This could lead to an even further decline with a short-term 50% level at 7565.31 the next target, followed by 7552.64, the 50-day moving average.

Daily Nasdaq Composite Index (IXIC) Technical Analysis

The Nasdaq closed at 26,130.20. This is about 182 points above the 50-day moving average at 25948.10. Buyers stepped in before the 50-day MA, but the rebound stalled below 26,225.83.

The current setup is simple. Holding above the 50-day MA will keep the recent pullback contained. A break below it puts the short-term 50% level at 25,650.43 back in play. On the upside, buyers need to clear 26,225.83 to trigger a move into the minor pivot 26393.17. Overtaking this level and the minor swing top at 26456.78 will shift momentum to the upside.

Daily Dow Jones Industrial Average (DJI) Technical Analysis

The Dow Jones Industrial Average edged lower on Wednesday as traders continued to show respect for the last swing top at 53710.06 and a short-term retracement zone at 53749.62 to 53984.37. Overtaking this area will put the Dow back on track for a retest of the record high at 54744.33.

On the downside, the key support is an intermediate retracement zone at 53143.20 to 52765.33. This is followed by the 52-week moving average at 52721.00.

What to Watch

Nvidia reports after the close and the market is waiting on the guidance more than the earnings number. PCE did not clear the rate trade. The bond market has not picked a direction. Meta’s settlement added cost on top of existing AI commitments. The market went into Wednesday light and came out the same way.

The S&P 500 is stuck inside the August 20 trading range. The Nasdaq is holding just above its 50-day moving average. Warsh speaks Friday. The direction depends on what Nvidia shows tonight and what the Fed chair says about inflation at the end of the week.

More Information in our Economic Calendar.