Stocks volatile in thin trade ahead of Nvidia reports: Markets summary

(Bloomberg) — Stocks were little changed as investors held off on decisions ahead of Nvidia Corp.’s earnings and U.S. inflation data later in the week.

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U.S. stock futures were little changed. The pan-European STOXX 600 erased early gains as declines in retailers offset gains in automakers and miners. Trading volumes were low, with activity in most European indexes at about three-quarters of the average level over the past 30 days. Treasuries and the dollar were steady.

The stakes are high for Nvidia, which reports results on Wednesday, after a disappointing earnings season for other “Grand Seven” companies. Investors will also be watching data on economic growth and inflation in the United States later in the week. In Asia, more evidence of a slowdown in China weighed on investor sentiment.

“Nvidia’s numbers will be good, but what matters is the direction to understand if demand is still healthy,” said Alberto Tocchio, portfolio manager at Kairos Partners. “If we get bad news, the rotation will be stronger than ever as the market is still heavily reliant on large caps.”

Nvidia’s weighting, the second-largest in the S&P 500 after Apple, and its high valuation mean it’s vulnerable to big swings that could reverberate widely. Options pricing shows traders pricing in a move of about 10% in either direction after earnings, which would mean the Nasdaq 100 rising about 160 points, or a 0.8% move, according to data compiled by Bloomberg.

Read: What a September rate cut could mean for the economy and the elections

Among individual stocks in premarket trading in the United States, Paramount Global shares fell after Seagram heir Edgar Bronfman Jr. withdrew from the bid to take over CBS parent company, with producer David Ellison’s Skydance Media set to become the new owner. Nvidia shares rose.

In Europe, Associated British Foods shares fell after Deutsche Bank downgraded the stock to sell from hold. Ryanair led gains in European airline and travel stocks after Chief Executive Michael O’Leary said the fall in ticket prices between April and June had levelled off. Bunzel shares rose after the distribution group raised its full-year profit forecast.

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Meanwhile, San Francisco Fed President Mary Daly said it was appropriate to start cutting interest rates, while her Richmond counterpart Thomas Barkin said he still saw risks of higher inflation, although he supported “lowering” interest rates.

Economists expect the core personal consumption expenditures price index, excluding food and energy, the Fed’s preferred measure of core inflation, to rise 0.2% in July for the second straight month. That would bring the three-month annual core inflation rate down to 2.1%, just above the central bank’s 2% target.

“Powell sealed the deal on a September rate cut at Jackson Hole — leaving our expansion/recycling thesis intact,” said Ausung Kwan of Bank of America Corp. “But we shouldn’t ignore Nvidia’s earnings, which are a consistent driver of S&P returns and still pose a risk to markets if they disappoint.”

Main events this week:

• US Consumer Confidence Index released by the Conference Board, Tuesday

• Nvidia Earnings, Wednesday

• Fed’s Rafael Pusic and Christopher Waller speak Wednesday

• Eurozone Consumer Confidence, Thursday

• US GDP, Initial Jobless Claims, Thursday

• Fed’s Raphael Boucek speaks Thursday

• Japan Unemployment, Tokyo CPI, Industrial Production, Retail Sales, Friday

• Eurozone CPI and Unemployment, Friday

• US Personal Income, Spending, CPI; Consumer Sentiment, Friday

Some key movements in the markets:

Stocks

• S&P 500 futures were little changed as of 6:28 a.m. ET in New York.

• Nasdaq 100 futures were little changed.

• Dow Jones Industrial Average futures were little changed.

• The Stoxx Europe 600 index was little changed.

• The MSCI World Index saw little change.

Currencies

• The Bloomberg Dollar Index was little changed.

• The euro was little changed at $1.1167.

• The pound rose 0.3% to $1.3222.

• The Japanese yen fell 0.1% to 144.74 yen per dollar.

Cryptocurrencies

• Bitcoin fell 1.6% to $62,411.06

• Ether price fell 1.5% to $2,648.06

Bonds

• The yield on the 10-year US Treasury note rose two basis points to 3.84%.

• The yield on the 10-year German bond rose by three basis points to 2.28%.

• The yield on the 10-year British bond rose nine basis points to 4.00%.

Goods

• West Texas Intermediate crude fell 0.8% to $76.77 a barrel.

• Spot gold fell 0.4 percent to $2,508.55 an ounce.

This story was produced with the help of Bloomberg Automation.

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