.jpg)
When Federal Reserve Chairman Jerome Powell said it was time to start cutting interest rates, cheers could be heard from one side of the United States to the other.
Stocks rose in response to Powell’s speech. Interest rates fell. Gasoline prices fell, too, and most people shrugged off Friday’s rise in oil prices.
It was a good day. Although the weather was nice for the weekend, you could see that things could get worse.
Related: Analysts Revise Target Stock Price Estimates After Earnings
To underscore this point, early Sunday morning Israel attacked Hezbollah positions in southern Lebanon.
No information on casualties or deaths was available as of 12 a.m. ET Sunday. It was unclear how the attacks and other fighting might impact global markets on Monday.
The geopolitical situation adds further tension to an undercurrent of unease that continues with layoffs at many companies, including technology companies, and long bankruptcy lists for small businesses.
The U.S. presidential and national election campaigns will be in full swing over the Labor Day weekend. In addition to concerns about the Middle East, the war between Ukraine and Russia could become even more dangerous than it already is.
In the meantime, here’s what to watch in the markets this week.
View PCE Report
Last week, the US Federal Reserve began what seemed like an era of good feelings with the release of the minutes of its July meeting on August 21. These documents are usually dull and unclear. But these minutes made it clear that cutting interest rates was very much on the Fed’s mind.
On August 30, the Commerce Department’s Bureau of Economic Analysis will release its July Personal Consumption Expenditures Price Index. This measure measures changes in the prices of goods and services that consumers buy and use. It’s less risqué than the CPI, and is favored by Fed governors and staff.
In June, the personal consumption expenditures index showed the index rose 2.5% from a year earlier. Estimates suggest a change of 2.4%, perhaps slightly less. Gasoline prices also fell, as did interest rates and some food prices.
If the PCE report shows a surprise rise, markets will react badly, and the Fed, which is always dependent on the data, may have to respond.
More about markets
- Analysts Reset Targets for Key Nvidia Supplier After Earnings
- Jerome Powell’s latest comments on interest rates hint at what’s next for investors
- From Nike to UnitedHealth: The Best High-Yield, Dividend Stocks
Nvidia will dominate investor talk
Nvidia (NVDA program) Microsoft, the developer of the graphics processing units that are at the heart of AI applications, is the star of the week. The company reported fiscal second-quarter earnings after the close on Wednesday.
Nvidia shares are up 161.2% in 2024, based on Friday’s close of $129.37. Its market cap is $3.182 trillion and it is now the second-largest U.S.-based company, behind Apple. (Apple Inc.) Microsoft’s market cap is $3.45 trillion. (Microsoft) It has a market cap of $3.01 trillion and is ranked third.
Nvidia is expected to report earnings of 64 cents a share, a whopping 156% increase from the 25 cents a share it reported a year ago. Revenue is expected to come in at $28.6 billion, up 110% from a year earlier.
The reason is that everyone involved in developing applications that use artificial intelligence can’t get enough of Nvidia’s Hopper GPUs, and they’re hoping to get their hands on the new Blackwell family of GPUs. The difference is that the average Hopper GPU has 80 billion transistors. The average Blackwell GPU has 208 billion transistors.
There’s a catch, and a risk: Blackwell’s GPUs were supposed to be available by the end of the year. But now, according to The Information and other sources, the products won’t be available until March 2025 due to design flaws.
The issue will affect the plans of Microsoft and Meta Platforms, the parent company of Facebook. (Meta) Alphabet, the parent company of Google (Google) Everyone said they were prepared to spend billions of dollars on GPUs and related components to move forward.
So far, the reports haven’t impacted the stock price. But analysts are sure to ask about Blackwell’s GPUs on the conference call after the earnings report.
Don’t forget CrowdStrike
Crowd Strike (Crood) The big cybersecurity company would probably prefer no one to notice that it is releasing its earnings literally at the same time as Nvidia.
This is due to a flawed update the company sent in July to customer networks built on Microsoft software that caused computer outages around the world. Airlines were the hardest hit, especially Delta Air Lines. (Dal) Delta Air Lines was unable to fix the glitch for several days, and television reports showed stranded passengers camping near Delta ticket offices at airports across the country.
It is not yet clear whether CrowdStrike faces any financial liability for the computer disruptions.
CrowdStrike is expected to report fiscal second-quarter earnings of 97 cents per share, up 31% from a year ago. Revenue is expected to be $958.6 million, up 30% from $731.5 million a year earlier.
Between the computer outage and the market selloff in late July and early August, the stock had a rollercoaster summer. Shares fell 49.7% between an intraday high of $393.33 on July 9 and an intraday low of $200.81 on Aug. 5. They’re up 35% since then and up 6.4% for the year.
Despite all the volatility, only one of the fifty analysts covering the company rates it as a sell, while two rate it as underweight. Thirty-two rate the stock as a buy, and eight rate it as a hold.
Related: Uber-style robot taxis may be the next step in the evil trend
Among the companies that also reported this week were:
Tuesday: nordstrom retail store (JWN) Estimate: 74 cents per share, down from 84 cents per share a year ago.
Wednesday: Dow Component in Salesforce (Customer Relationship Management) Estimate: $1.73 per share, up from $1.63. HP Inc. (HPQ) Estimated at 86 cents, unchanged from a year ago. Netapp NTAP. Estimated at $1.15, up from 84 cents a year ago.
Thursday: Dell Technologies, a server manufacturer (Dell) . Estimated $1.49, up from $1.44. Marvell Technology Inc. Chipmaker (MRVL) Estimate: 13 cents, down from 18 cents a year ago. Fashion store Lululemon Athletica (Lulu) Estimate: Estimated $2.94, up from $2.68.
Related: Veteran Fund Manager Sees a World of Pain Coming for Stocks
