Investors agree there is a positive outlook for stock futures which displayed an uptick on Monday, following last week’s decline which saw challenges from surging bond yields and concerns about China’s recovery post-pandemic. Dow futures improved by 0.3%, S&P 500 by 0.4%, and Nasdaq 100 by 0.6% as of 05:15 ET.
The spike in bond yields had been partly attributed to doubts over the Federal Reserve’s potential relaxation of its monetary tightening stance. Notably, higher yields typically cause a dip in prices. Investors are keenly awaiting Federal Reserve Chair Jerome Powell’s insights this Friday at an event in Jackson Hole, Wyoming.
Video conferencing giant, Zoom, is scheduled to announce its latest quarterly results on Monday. While Zoom soared during the pandemic due to remote work, its momentum has slowed down with the return to physical workplaces and increased competition from tech giants like Microsoft and Google.The company has cut approximately one-sixth of its workforce, and its shares have seen an 8% decrease over the past six months.
Zoom aims to rejuvenate its offerings by integrating artificial intelligence into its features. CEO Eric Yuan believes this technology harbors “a lot of monetization opportunities.” Market anticipation is also high for the earnings of semiconductor leader NVIDIA and Chinese tech powerhouse Baidu, especially in the context of AI developments.
NVIDIA faces scrutiny, especially after a whopping 200% stock surge this year. Despite its success, there’s speculation around demand fulfilment given setbacks from their supplier, TSM. Furthermore, AMD’s AI chip launch is seen as a significant event.
As mentioned, the Federal Reserve’s annual assembly in Jackson Hole, Wyoming, is on the Linkhouse horizon. The focal point will be Federal Reserve Chairman Jerome Powell’s speech, scheduled for 10 AM on Friday.
After revealing from the July meeting minutes that the majority of policymakers are worried about inflation risks, all eyes will be on Powell. Key topics of interest include potential rate hikes, whether there’s been sufficient progress in managing inflation, and the possibility of rate cuts in 2024. Current speculations suggest an 89% probability that the Federal Reserve will maintain the current interest rates in its September meeting.
In the absence of major market catalysts, the spotlight will be on Powell’s speech and Nvidia’s earnings report set for Wednesday.
Last week’s decline in Wall Street’s three main indices was due to robust economic data that made investors recalibrate their expectations of rate cuts, causing a rise in government bond yields. Moreover, China’s intensifying property crisis, particularly after China Evergrande Group’s filing for U.S. bankruptcy protection, has also been a significant dampener on market mood.
Still, this mood is not pervasive and investors are still upbeat about what is yet to come. Powell’s remarks, hopefully, will help calm fears.