Stocks ended mixed Thursday, with the Dow closing at a fresh record high, while the Nasdaq lost ground after AI heavyweight Nvidia's shares fell.
The Dow Jones Industrial Average gained 243.63, or 0.59%, to end the session at 41,335.05, while the S&P 500 dipped marginally to 5,591.96 and the tech-heavy Nasdaq lost 0.23% to end the day at 7,516.43.
Nvidia dropped 6.4% and pulled down the S&P 500 and the Nasdaq.
The dominant player in AI development beat analyst estimates on revenue and earnings in its second-quarter earnings and guided higher for the third quarter and the full year.
Second quarter consumer spending was revised up to 2.9% annualized from initially reported as 2.3%, while headline growth was revised up to 3% annualized from 2.8%.
"Downward revisions to inflation accompanying an upward revision to spending builds the case for a soft landing," said Jeffrey Roach, chief economist for LPL Financial. "The key for the rest of this year will be the job market."
"Leading indicators for employment indicate services employment is starting to cool but the savings from lower mortgage debt servicing will continue to support household balance sheets.," Roach said.
Updated at 11:34 AM EDT
Down to earth?
Nvidia shares remain the market's most-active stock Thursday, and were last marked 3.7% lower on the session at $121.09 each following last night's earnings update.
Investors are likely taking some of their profits from the stock's astonishing 150% year-to-date gain, while others are looking at the group's slowing sales growth, and modestly narrowing margins, as a sign that its hypergrowth trajectory could be waning into the back end of the year.
"The main takeaway from Nvidia’s results is that Nvidia-mania has passed its Zenith," said Kyle Rodda, senior market analyst at Capital.com. "This dynamic isn’t necessarily a bearish omen for its stock or the broader market; it just means that, from now on, it will be analysed and valued like any other company.”
Related: Analysts overhaul Nvidia stock price targets after Q2 earnings
Updated at 9:35 AM EDT
Solid open
The S&P 500 was marked 322 points, or 0.4%, in the opening minutes of trading, with the Nasdaq rising 117 points, or 0.67% as the tech-focused index was capped by a 2.8% decline for Nvidia.
The Dow, meanwhile, jumped 260 points and the small-cap Russell 2000 index gained 16 points, or 0.77%.
"The message of this morning’s data is “steady as she goes.” Weekly jobless claims were slightly lower than last week and GDP was revised slightly higher," said Chris Larkin, managing director for trading and investing at E*Trade from Morgan Stanley.
"The economy doesn’t appear to be falling off a cliff, and in the current market, good news is good," he added. "There was nothing here to make the Fed rethink its plan to cut rates next month."
Updated at 8:36 AM EDT
What recession?
The U.S. economy grew at a 3% clip over the second quarter, according to the latest Commerce Department update, a solid improvement from its prior forecast of 2.8%, thanks to a big jump in consumer spending.
Weekly jobless claims, meanwhile, fell modestly to 231,000 over the period ending on August 24, taking the four-week average to 231,500 and suggesting ongoing firmness in the labor market.
Stock futures extended gains in the wake of the data release, with futures tied to the S&P 500 indicating a 21 point opening bell gain and those tied to the Dow pricing in a 290 point advance.
Benchmark 2-year Treasury note yields rose 2 basis points to 3.887% while 10-year notes nudged higher and were last marked at 3.861%.
Updated at 8:09 AM EDT
Generally horrible
Dollar General (DG) shares collapsed in premarket trading after the discount retailer slashed its full-year profit outlook amid what it called "a core customer who feels financially constrained" .
The Goodlettsville, Tenn.-based group halved its same-store sales forecast and loped $1.35 from the higher end of its annual earnings forecast, taking it to between $5.50 to $6.20 per share.
Dollar General shares were last marked 21.9% lower in premarket trading to indicate an opening bell price of $93.01 each.
Stock Market Today
Nvidia's (NVDA) highly anticipated July-quarter earnings report included record data center revenue, a solid near-term demand outlook and solid profit margins, but hints to delays for its new Blackwell processors and slowing overall revenue growth rates clipped the stock in after-hours trading.
The broader market optimism in the AI-investment story, however, remains largely unchanged and should support markets heading into the final trading days of the summer and next week's Labor Day holiday.
Related: Nvidia earnings top forecast, but Blackwell delay signal hits stock
Focus in today's session is now likely to shift to the Federal Reserve's rate path, which is inexorably tied to the pace of inflation pressures and a cooling labor market heading into the central bank's September policy meeting in Washington.
Traders have locked in around 100 basis points of rate cuts between now and year's end. They put the odds of a 50 basis point cut next month at around 36.5%, according to data from the CME Group's FedWatch.
That could change today, however, with the release of an advanced reading for second-quarter GDP growth, which will include detailed inflation data, as well as the Labor Department's tally of weekly jobless claims. Both are slated for 8:30 am Eastern Time.
Bond markets were steady heading into the data releases, with 2-year notes trading at 3.861% and benchmark 10-year notes easing to 3.822% at the start of the New York session.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.15% higher at 101.241 as it continues to rebound from the 13-month low it hit earlier this week.
On Wall Street, futures contracts tied to the S&P 500, which is up 1.3% for the month and is just 1.4% away from its all-time peak set in July, suggest a 10-point opening-bell gain for the blue-chip benchmark.
The Dow Jones Industrial Average, meanwhile, is called 185 points higher with the tech-focused Nasdaq priced for a 35-point advance.
Nvidia shares were marked 2% lower, indicating an opening bell price of $123.24, with more than 4.3 million shares changing hands in premarket trading.
Salesforce (CRM) shares were also active, rising 5.07% to $272.02 after the client software group topped Wall Street's second-quarter earnings forecasts and boosted its full-year profit forecast on improved cloud spending prospects.
More Economic Analysis:
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- CPI report upsets betting on big Fed rate cut
- Main Street businesses push back on Wall Street recession gloom
In Europe, Germany's DAX performance index hit an all-time high of 18,892.92 points in early Frankfurt trading, while the regional Stoxx 600 benchmark added to recent gains with a 0.68% advance.
Overnight in Asia, markets were largely muted in the wake of Nvidia's earnings report, with the Nikkei 225 ending 0.02% lower in Tokyo and the MSCI ex-Japan benchmark falling 0.17% into the close of trading.
Related: Veteran fund manager sees world of pain coming for stocks
