US open: Stocks gain as investors eye Nvidia results

US stocks rose in early trade on Wednesday as investors mulled the latest manufacturing and services PMIs and looked ahead to second-quarter results from Nvidia after the close and the Jackson Hole symposium later this week.

At 1540 BST, the Dow Jones Industrial Average was up 0.2%, the S&P 500 was 0.6% firmer and the Nasdaq was 1.1% higher ahead of Nvidia’s results.

Joshua Mahony, senior market analyst at Scope Markets, said: "Nvidia earnings look to dominate tech sentiment, with the likes of Microsoft, Google, Meta, IBM, Oracle, and Amazon particularly expecting to see volatility based on the strength or weakness of Nvidia earnings.

"Meanwhile, markets gear up for tomorrow's Jackson Hole Symposium, with Powell’s appearance on Friday providing the main event of note."

On the macro front, a survey out earlier showed that business activity fell to a six-month low in August.

The S&P Global flash composite purchasing managers’ index declined to 50.4 from 52.0 in July, signalling the weakest upturn in activity since February.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "A near-stalling of business activity in August raises doubts over the strength of US economic growth in the third quarter. The survey shows that the service sector-led acceleration of growth in the second quarter has faded, accompanied by a further fall in factory output.

"Companies report that demand is looking increasingly lethargic in the face of high prices and rising interest rates. A resultant fall in new orders received by firms in August could tip output into contraction in September as firms adjust operating capacity in line with the deteriorating demand environment. Hiring could likewise soon turn into job shedding in the coming months after a near-stagnation of employment in August.

"Rising wage pressures as well as increased energy prices have meanwhile pushed input cost inflation higher, which will raise concerns over the stickiness of consumer price inflation in the months ahead. One upside is that weak demand is starting to limit pricing power, which should help keep a lid on inflation around the 3% mark."

Elsewhere, data from the Commerce Department showed that new home sales rose 4.4% to a seasonally-adjusted annual rate of 714,000 units in July. This was ahead of expectations of 705,000. Meanwhile, June’s sales were revised down to 684,000 from 697,000.

In equity markets, Foot Locker tanked 34% after the retailer cut its full-year forecasts and posted weaker-than-expected second-quarter results.

Peloton shares also slid after it reported a drop in fourth-quarter revenue, pointing to a slowdown in subscriber growth, and said the cost of its seat recall had "substantially exceeded" initial expectations.

After the close, results are due from Nvidia. Neil Wilson, chief market analyst at Markets.com, said "clearly a lot is hanging on" the numbers.

"It’s expected to deliver a roughly 67% rise in Q2 revenues. Remember a lot is already in the price after it guided for fiscal Q2 to be $11bn, $4bn more than had been expected. Options imply an 11% swing in the share price … if you are trading it, good luck," he said.