Nvidia and US Economic Data: Markets in Waiting Mode

The stock market activities were rather subdued on Tuesday, as the release of Nvidia's earnings is imminent, and a series of important U.S. economic data are expected by the end of the week. U.S. stock futures, government bonds, and the dollar remained largely stable. The focus is particularly on Nvidia's results, which are of significant importance after a disappointing earnings season for other members of the "Magnificent Seven." The upcoming reports on U.S. economic growth, prices, personal consumption, and the labor market contribute to the tense atmosphere. As the second-largest company in the S&P 500 after Apple, Nvidia has high market relevance and the potential for significant price fluctuations. Option markets indicate a possible price movement of almost 10% following the release, which could translate into a 160-point jump in the Nasdaq 100 Index or a 0.8% change, according to Bloomberg data. "Nvidia's numbers will be good, but the forecast is crucial to understand if demand remains healthy," said Alberto Tocchio, Portfolio Manager at Kairos Partners. "With bad news, market rotation will be stronger because the market continues to focus heavily on mega-cap stocks." In U.S. pre-market data, Paramount Global fell after heir Edgar Bronfman Jr. exited the bidding competition for the company. Producer David Ellison's Skydance Media will now be the new owner of the CBS parent company. Nvidia shares edged up slightly. Investors hope that the bull market extends beyond the big tech stocks after Fed Chairman Jerome Powell hinted at lowering interest rates soon. Other Fed officials support this view: Mary Daly and Thomas Barkin also advocated for a loose monetary policy. Economists expect the Personal Consumption Expenditures (PCE) index excluding food and energy to rise by 0.2% in July, which would lower the three-month annualized core inflation rate to 2.1%. "Of course, the central bank will stress that no decision has been made yet and will wrap this under the motto 'data-dependent,'" commented Volkmar Baur, Strategist at Commerzbank. "But 95% of the necessary data should already be available." In Europe, the Stoxx 600 Index erased early gains. Declines in retailers were offset by increases in automakers and mining companies. Trading volumes remained low, at about three-quarters of the average level of the past 30 days. Shares of Associated British Foods fell after Deutsche Bank downgraded its rating from "Hold" to "Sell." Ryanair led gains among European airlines after CEO Michael O'Leary announced a stabilization of prices between April and June. Shares of Bunzl rose after the distribution company raised its profit forecast for the full year.