US close: Stocks inch higher ahead of Nvidia earnings, Dow sets another record

dl wall street wall st new york city nyc new york stock exchange nyse dow jones industrial average nasdaq subway platform sign unsplash — Sharecast / Martin Ceralde via Unsplash

US stocks recovered some lost ground in afternoon trade to close marginally higher, with the Dow Jones Industrial Average eking out another record high, though gains were only modest as investors cautiously awaited the latest earnings report from semiconductor giant Nvidia.

The Dow finished just 0.02% higher at a new all-time closing high of 41,250.50, while the S&P 500 and Nasdaq both rose 0.16%. All three indices were trading in the red earlier in the session.

Stocks have been surging in recent weeks – the Dow in particular has jumped 6.4% since 7 August – on the back of rising expectations that the Federal Reserve will ease monetary policy at its next meeting in September. These projections were cemented on Friday by comments from Fed chair Jerome Powell, who indicated that the "time has come" to cut interest rates.

Investors are now trying to predict how large a rate-cut could be as well as the path for any future easing, with markets already pricing in at least a 25 basis-point reduction in the benchmark lending rate next month.

Nevertheless, Axel Rudolph, senior technical analyst at IG, said the recent rally in equity markets is "slowing down" ahead of Nvidia's second-quarter results on Wednesday.

"With the chipmaker's stock contributing around 5% to the S&P 500's 18.6% year-to-date gains, its results will be closely watched by investors and will likely have a significant impact on not just the S&P 500 but also other global stock indices," he said.

Nevertheless, helping sentiment on the market on Tuesday was economic data which showed that US consumer confidence rose to a six-month high this month. The Conference Board's Consumer Confidence Index increased to 103.3 from an upwardly revised 101.9 in July, coming in ahead of the 100.7 consensus forecast.

Meanwhile, US home price growth continued to outpace inflation in June, according to the S&P/Case Shiller US home price index, rising 0.4% month-on-month. The report also revealed that home prices in the 20 major US metropolitan markets were up 6.5% year-on-year, cooling from May's 6.9% increase but ahead of expectations for a reading of 6.3%.

Finally, the Richmond Federal Reserve Bank's manufacturing index fell to -19 in August, down from -17 in July, reflecting the sharpest decline in factory activity since May 2020.

Market movers

Shares in Walgreens Boots Alliance plunged 9% after drugmakers Pfizer and Eli Lilly announced major direct-to-consumer announcements, which could hit sales for the pharmacy chain.

Pfizer launched a new platform called PfizerForAll which gives patients direct access to respiratory vaccines and migraine treatments, as well as offering telehealth solutions and an online pharmacy; while Eli Lilly said it was reducing prices for its weight-loss drug Zepbound to consumers when bought directly.

Edgar Bronfman Jr officially withdrew his bid to acquire Paramount Global on Tuesday, causing shares in the entertainment group to drop 7%. The move effectively clears the way for Skydance Media to take control of the company.

Meanwhile, US-listed shares of Chinese e-commerce giant JD.com gained, attempting a rebound after dropping sharply over recent sessions after Walmart revealed it was selling its entire $3.7 billion stake in the company. On Tuesday, JD.com unveiled a new $5bn share buyback programme, set to begin in September and extend over the next 36 months.

Dow Jones - Risers

Nike Inc. (NKE) $85.29 1.20%
Visa Inc. (V) $270.72 0.94%
Coca-Cola Co. (KO) $71.50 0.93%
JP Morgan Chase & Co. (JPM) $220.18 0.46%
American Express Co. (AXP) $255.23 0.45%
Travelers Company Inc. (TRV) $223.64 0.39%
International Business Machines Corporation (CDI) (IBM) $198.73 0.38%
Apple Inc. (AAPL) $228.03 0.37%
McDonald's Corp. (MCD) $289.64 0.33%
Merck & Co. Inc. (MRK) $116.50 0.20%