August 30, 2024 – What were the biggest news items in the stock market this week? Financial Sense Wealth Management's Ryan Puplava cover this week's most important news events, including the big plunge in Super Micro Computer (SMCI), Berkshire's market cap topping $1 trillion, and the widely anticipated Nvidia earnings, which was followed by profit taking by investors. Listen in on the player above or read this week's wrap-up below:
This week wasn't dominated by macroeconomic events; instead, the news was largely stock-specific, mostly driven by earnings reports, with no single company, not even the mega-cap Nvidia (NVDA), moving the entire market. Stocks mostly continued to consolidate after a rally earlier in the month fueled by hopes for a rate cut at the September Federal Reserve meeting. Chairman Powell’s speech at the Jackson Hole Symposium last week reinforced current rate expectations, and this week’s economic data hasn’t significantly shifted investor sentiment.
The week started with a spike in energy prices on Monday, with West Texas Intermediate crude oil futures rising 3.4% to $77.42 per barrel. The increase was driven by strikes over the weekend by Israel and Hezbollah, as well as Libya's government announcing a halt in oil production.
On Wednesday, Super Micro Computer (SMCI) announced it would delay its 10-K filing for the fiscal year ending June 30th to complete its assessment of internal control over financial reporting. This news had a broad impact on the information technology sector, causing the stock to drop 19% that day and leading to a 1.3% decline in the tech sector overall, just ahead of Nvidia’s anticipated earnings release. Around the same time, financials overtook technology as the best-performing sector since the August 5th bottom, boosted by the news that Berkshire Hathaway's (BRK.A) market capitalization topped $1 trillion.
After the market closed on Wednesday, Nvidia reported strong earnings, exceeding both earnings and revenue estimates for the quarter and raising its guidance for the next quarter. However, the updated guidance was more conservative than the previous quarter’s, prompting some investors to take profits, especially since Nvidia’s stock had already surged 150% this year. Nvidia shared positive comments on AI demand, noting that many industries are finding new uses for generative AI. The company also announced an additional $50 billion for share buybacks this year. While Nvidia’s revenue grew 122.4% year-over-year, the company may face tougher growth comparisons moving forward. Addressing shipment concerns, Nvidia mentioned that Blackwell production would begin in January, with several billion dollars in Blackwell revenue anticipated and demand outstripping supply, alongside increased Hopper shipments expected in the second half of 2025.
On Thursday, Nvidia’s stock dropped 6.4% to $117.59 due to profit-taking, but the Nasdaq closed only 0.2% lower, partly offset by other positive earnings reports, such as CrowdStrike’s (CRWD) 2.8% rise, Affirm Holdings’ (AFRM) 31.9% surge, and Best Buy’s (BBY) 14.1% increase. Additionally, Citi named Apple (AAPL), which rose 2.5%, as its top AI pick. Friday saw continued positive responses to earnings from companies like Dell (DELL), Autodesk (ADSK), Lululemon Athletica (LULU), Marvell (MRVL), and MongoDB (MDB), which boosted investor sentiment.
This week’s economic data didn’t support the outlook for a 50-basis point rate cut, nor did it challenge the expected quarter-point cut. July’s Durable Goods orders, excluding transportation, fell by 0.2%, and new orders for nondefense capital goods, excluding aircraft, declined by 0.1%, indicating continued softness in business spending. The Conference Board’s Consumer Confidence Index improved to 103.5 in August from 101.9 in July, although consumers expressed more concerns about labor market conditions, which could potentially reduce future retail spending. Weekly initial jobless claims remained stable at 231,000, with the previous week revised slightly higher to 233,000, still well below recession levels. The second estimate for Q2 GDP was revised up to 3.0% from 2.8%, while July Pending Home Sales dropped by 5.5%. On Friday, Personal Income rose 0.3% month-over-month, and the PCE Price Index, the Fed’s preferred inflation measure, increased by 0.2% and 2.5% year-over-year, unchanged from June, likely supporting a quarter-point rate cut from the Fed next month.
In conclusion, this week was marked by stock-specific movements rather than major macroeconomic events, with earnings reports driving much of the market's activity. Despite some fluctuations, including Nvidia’s mixed reactions and notable sector shifts, the overall market maintained a steady consolidation following earlier rallies. Economic data provided a mixed picture, with some indicators suggesting continued economic resilience, while others pointed to ongoing softness in business spending and consumer confidence. As investors digest these signals, the anticipation remains focused on the Federal Reserve’s upcoming decision, with a likely quarter-point rate cut expected next month based on the current inflation outlook and economic conditions.
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