U.S. stocks end sharply lower as Nvidia rally fades, attention turns to Jackson Hole

What drove markets

“The rally this week off the near-term Aug. 17 low appears to be fading, but the focus is clearly on Jay Powell speaking tomorrow,” said Louis Navellier, founder of Navellier & Associates, in a note.

Powell is scheduled to speak Friday morning at the Kansas City Fed’s Jackson Hole Economic Symposium. The event, an annual highlight of the central bank’s summer calendar, got under way Thursday.

“Last year he spoke of pain and really accelerated the selloff into the October lows. No one expects anything like that this year, but there is certainly anxiety that he may spin a hawkish tone and swing hopes that the Fed might be done with a possible cut by year-end, to one or two more increases possible in ’23,” he said.

Well-received earnings from AI chip maker Nvidia Corp. NVDA were in focus, with shares rocketing higher after the opening bell but subsequently fading as the broader market turned lower.

The chipmaking giant, which has been perhaps the biggest beneficiary of this year’s AI boom, reported a 141% surge in data-center sales and record earnings, while also serving up third-quarter revenue guidance of $15.68 billion to $16.32 billion, which surpassed Wall Street’s expectations. Shares ended with a gain of just 0.1% near $471.74 after rising above $502 in early action.

Ivana Delevska, founder and CIO of Spear Invest, said Nvidia’s success would likely help boost the broader technology sector over time. However, even as the company surpassed Wall Street’s lofty expectations, the company faced an even higher bar among investors. “I don’t think Nvidia could have reported anything stronger than this, but it’s still not impressing the market,” Delevska said.

Nvidia’s numbers failed to offset other macro factors that have bedeviled markets over the past few weeks, she added: “With the 10-year yield above 4%, people are looking for something to break,” she added.

Shares of Palantir Technologies PLTR, Advanced Micro Devices AMD and OpenAI investor Microsoft MSFT erased premarket gains and turned lower. Other members of the so-called “Magnificent Seven” group of megacap stocks also slid into the red, including Amazon.com Inc. AMZN, Tesla Inc. TSLA, Apple Inc. AAPL as well as Google parent Alphabet Inc. GOOGL GOOG, another major AI player with its Bard chatbot.

Treasury yields edged higher Thursday, paring some of Wednesday’s drop that had sent them to their lowest levels in a week. The yield on the 10-year note rose 3.7 basis points to 4.234%. The ICE U.S. Dollar Index , a gauge of the greenback’s value against major currencies, jumped 0.6% to trade at its highest since early June.

Investors also received another batch of U.S. economic data Thursday, including weekly jobless benefit claims numbers. Data showed the number of Americans who applied for unemployment benefits last week fell by 10,000 to a three-week low of 230,000, offering further evidence that the labor market remains rock solid.

Data on durable-goods orders for long-lasting goods rose in July for the third month in row if recent ups and downs at Boeing are set aside. Orders increased 0.5% in July if transportation, autos and planes, are excluded.

Companies in focus

• Boeing Co. stock BA fell along with shares of Spirit AeroSystems SPR after disclosing an issue with fastener holes on Boeing 737 Max aircraft.
• U.S. Steel stock X traded lower, extending a decline from Wednesday after Esmark withdrew its offer for the company that is being pursued by Cleveland-Cliffs CLF.
• Snowflake Inc. SNOW shares slumped after reporting quarterly earnings Wednesday. The company reported a fiscal second-quarter net loss of $227 million, or 69 cents a share, compared with a loss of $223 million, or 70 cents a share from the same period a year earlier. It also kept its full-year guidance steady, breaking from a pattern of guidance cuts.