US Market Wrap 27 August: Technology Stands Alone as Nvidia and Earnings Beats Lift the Nasdaq
Technology was the only one of the 11 S&P 500 sectors to close higher on Thursday, rising 3.40 percent while the other ten all finished in the red. The Nasdaq Composite jumped 1.57 percent and the Nasdaq 100 gained 1.43 percent, the S&P 500 added 0.72 percent, and the Dow Jones Industrial Average gained 0.20 percent. CNBC attributed the session to a run of earnings beats from Nvidia, Salesforce, CrowdStrike and Okta, alongside a jobless claims report below consensus and hawkish remarks from two regional Federal Reserve presidents at the Kansas City Fed’s Jackson Hole symposium.
Technology’s lone advance
Every one of the other ten S&P 500 sectors closed lower on Thursday: Consumer Staples fell 1.50 percent, Health Care fell 1.10 percent, Consumer Discretionary fell 1.02 percent, Real Estate fell 0.92 percent, Industrials fell 0.84 percent, Communication Services and Utilities each fell 0.75 percent, Materials fell 0.71 percent, Financials fell 0.58 percent, and Energy fell 0.37 percent. Technology’s 3.40 percent gain sat far outside that range, a spread of 377 basis points over Energy, the best performer among the ten losing sectors, on our calculation. CNBC reported intraday that, if Thursday’s advance held through the close, it would mark the sector’s biggest one-day percentage gain on a day when it was the S&P 500’s only advancing sector, in records going back to 2006. The closing sector levels show Technology as the only sector of the 11 to finish higher, per CNBC.
The same concentration showed up in the headline indices. The Nasdaq Composite’s 1.57 percent gain outpaced the Dow’s 0.20 percent by 137 basis points, on our calculation, a gap consistent, on our reading, with the Nasdaq’s heavier weighting toward the sector that carried the session.
Earnings drive the gap
Nvidia reported second quarter revenue of 96.2 billion dollars, up 106 percent from a year earlier, with Data Center revenue of 89.0 billion dollars, up 117 percent. The company guided to third quarter revenue of 108.0 billion dollars, plus or minus 2 percent. CNBC reported that the chipmaker and its supply chain traded higher through Thursday’s session on the back of the results. Salesforce reported second quarter revenue of 11.35 billion dollars against a consensus estimate of 11.32 billion dollars, with adjusted earnings per share more than doubling from a year earlier on an investment gain, according to CNBC. Okta reported adjusted earnings of 1.05 dollars a share on revenue of 805 million dollars, ahead of the 97 cents a share and 795 million dollars analysts had expected, and raised its full year guidance, per CNBC. CrowdStrike also posted a second quarter that beat analyst expectations, according to CNBC. Outside Technology, single-name moves were more mixed, with names including J.M. Smucker, Dollar General, HP and Moderna moving on their own company-specific news through the session, according to CNBC’s market coverage.
A weaker claims number and two hawkish Fed presidents
The Labor Department reported initial jobless claims of 203,000 for the week ended 22 August, down 4,000 from the prior week and below the 208,000 consensus estimate. Continuing claims fell 18,000 to 1.78 million. At the Kansas City Fed’s Jackson Hole symposium, Cleveland Fed President Beth Hammack said “I believe now is the time to act,” arguing that inflation has run well above target for more than five years and that she sees no restriction in current policy. Kansas City Fed President Jeff Schmid said inflation remains “stubborn” and “sticky,” though he stopped short of calling for a rate move. Both officials described inflation as too high and policy as not clearly restrictive; they differed on timing and urgency rather than on direction. Neither is a voting statement of Federal Reserve policy, and no rate decision has been made. Fed Chair Kevin Warsh is due to deliver the symposium’s keynote speech on Friday.
US index closes, 27 August
| Index | Close | Change |
|---|---|---|
| Nasdaq Composite | 26,541.35 | +1.57% |
| Nasdaq 100 | 29,641.56 | +1.43% |
| S&P 500 | 7,730.99 | +0.72% |
| Russell 2000 | 3,014.34 | +0.28% |
| Dow Jones Industrial Average | 53,569.44 | +0.20% |
Closing levels, basis the 16:00 ET close. Per CNBC.
S&P 500 sectors, 27 August, ranked by change
| Sector | Level | Change |
|---|---|---|
| Technology | 7,029.94 | +3.40% |
| Energy | 946.15 | -0.37% |
| Financials | 961.94 | -0.58% |
| Materials | 671.40 | -0.71% |
| Communication Services | 451.40 | -0.75% |
| Utilities | 436.96 | -0.75% |
| Industrials | 1,511.85 | -0.84% |
| Real Estate | 284.45 | -0.92% |
| Consumer Discretionary | 1,902.43 | -1.02% |
| Health Care | 1,997.65 | -1.10% |
| Consumer Staples | 931.47 | -1.50% |
S&P 500 GICS sector indices at the close. Per CNBC.
US Treasury official daily par yield curve
| Maturity | 27 Aug | 26 Aug | Change |
|---|---|---|---|
| 1 Month | 3.81% | 3.80% | +1 bp |
| 1.5 Month | 3.79% | 3.78% | +1 bp |
| 2 Month | 3.81% | 3.80% | +1 bp |
| 3 Month | 3.84% | 3.85% | -1 bp |
| 4 Month | 3.88% | 3.88% | unch |
| 6 Month | 3.94% | 3.94% | unch |
| 1 Year | 4.04% | 4.02% | +2 bp |
| 2 Year | 4.20% | 4.19% | +1 bp |
| 3 Year | 4.30% | 4.29% | +1 bp |
| 5 Year | 4.38% | 4.37% | +1 bp |
| 7 Year | 4.52% | 4.51% | +1 bp |
| 10 Year | 4.67% | 4.66% | +1 bp |
| 20 Year | 5.18% | 5.17% | +1 bp |
| 30 Year | 5.19% | 5.18% | +1 bp |
US Department of the Treasury, official daily par yield curve rates.
Commodities, currencies and crypto, 27 August
| Instrument | Level | Change |
|---|---|---|
| ICE Brent crude (October) | $89.73 | +2.15% |
| COMEX silver (September) | $69.41 | +2.03% |
| Bitcoin | $79,966 | +1.93% |
| WTI crude (October) | $83.66 | +1.74% |
| COMEX gold (December) | $4,658.30 | +0.11% |
| US dollar index | 99.136 | -0.03% |
| VIX | 14.51 | -4.60% |
WTI, gold and silver are shown after their NYMEX and COMEX settlement windows. Brent, the US dollar index, VIX and Bitcoin are continuously quoted instruments. Per CNBC.
Middle East, 27 August session, carried from our Middle East Market Wrap
| Index | Close | Change |
|---|---|---|
| DFM General (Dubai) | 5,882.63 | +0.27% |
| QE Index (Qatar) | 9,876.29 | +0.23% |
| FTSE ADX General (Abu Dhabi) | 10,044.52 | +0.09% |
| Bahrain All Share (Bahrain) | 1,941.497 | -0.088% |
| Nomu Parallel Market (Saudi Arabia) | 21,797.66 | -0.12% |
| Tadawul All Share (Saudi Arabia) | 11,237.93 | -0.20% |
| ASE Index (Jordan) | 4,008.73 | -0.21% |
| MSCI Tadawul 30 (Saudi Arabia) | 1,514.43 | -0.32% |
Carried verbatim from our Middle East Market Wrap for the 27 August session, the most recent completed regional session. Boursa Kuwait, The Egyptian Exchange and the Muscat Stock Exchange were closed for the Prophet’s Birthday.
Europe, 27 August session, carried from our Europe Market Wrap
| Index | Close | Change |
|---|---|---|
| DAX (Germany), Xetra close | 26,367.24 | +0.31% |
| OMX Helsinki (Finland) | 13,742.79 | +0.24% |
| OMXS30 (Sweden), on our calculation | 3,321.44 | -0.15% |
| OMXC 25 (Denmark), on our calculation | 1,917.50 | -0.17% |
| BEL 20 (Belgium) | 5,838.67 | -0.38% |
| AEX (Netherlands) | 1,103.38 | -0.40% |
| PSI 20 (Portugal) | 9,389.24 | -0.60% |
| Stoxx Europe 600 (Europe) | 651.85 | -0.69% |
| Euro Stoxx 50 (euro area) | 6,424.73 | -0.71% |
| FTSE 100 (United Kingdom) | 10,792.54 | -0.79% |
| IBEX 35 (Spain) | 19,881.60 | -0.93% |
| SMI (Switzerland) | 14,384.37 | -1.09% |
| FTSE MIB (Italy) | 52,265.12 | -1.17% |
| CAC 40 (France) | 8,319.87 | -1.68% |
Carried verbatim from our Europe Market Wrap for the 27 August session, the most recent completed European session, including the two rows there computed by us and tagged accordingly.
Asia, 27 August session, carried from our Asia Market Wrap
| Index | Close | Change |
|---|---|---|
| Kospi (South Korea) | 6,912.37 | +1.53% |
| Shenzhen Component (China) | 14,048.88 | +1.50% |
| Kosdaq (South Korea) | 837.65 | +1.30% |
| Shanghai Composite (China) | 3,956.57 | +1.13% |
| Taiex (Taiwan) | 45,975.22 | +0.31% |
| Topix (Japan) | 4,117.22 | +0.15% |
| Nikkei 225 (Japan) | 66,131.98 | -0.20% |
| Hang Seng (Hong Kong) | 25,565.74 | -0.34% |
| Nifty 50 (India) | 24,090.85 | -0.48% |
| Straits Times (Singapore) | 5,684.12 | -0.65% |
| S&P/ASX 200 (Australia) | 9,038.20 | -0.98% |
Carried verbatim from our Asia Market Wrap for the 27 August session, the most recent completed Asian session.
Why it matters
A single sector carrying the entire index higher, while all ten others fall, is a narrow kind of advance. It says Thursday’s headline gain in the Nasdaq was concentrated in one part of the market rather than broadly based, built on earnings beats from Nvidia and a handful of software and security names. Hammack and Schmid, two regional Fed presidents, both described inflation as too high and policy as insufficiently restrictive, differing only on how soon the Fed should act. That leaves the path for the September meeting unsettled ahead of Chair Warsh’s own remarks on Friday, which carry more weight for policy than either regional president’s comments.
Outlook
With Technology now carrying essentially the whole market’s gain, the next sessions will show whether the rally broadens to the other ten sectors or whether Thursday’s move proves as narrow as it looked at the close. Fed Chair Kevin Warsh delivers the Jackson Hole symposium’s keynote on Friday, the policy event markets are watching most closely this week. The next scheduled Federal Open Market Committee meeting is 15 to 16 September.
Sources: CNBC, NVIDIA Corporation, US Department of Labor, US Department of the Treasury. Reference tables for the Middle East, Europe and Asia are carried from our own wraps for those sessions. Calculations described as ours are computed from the published levels shown.
