The Dow Jones Industrial Average reached a fresh record high on Thursday, driven by gains in key stocks like Goldman Sachs, Intel, and Visa. Meanwhile, the Nasdaq Composite faced a slight dip as Nvidia shares tumbled despite the company exceeding earnings expectations. The mixed performance reflects a rapidly changing market, balancing robust economic data—such as a drop in weekly jobless claims and a higher-than-expected GDP revision—with cautious investor sentiment amid fluctuating tech stocks and anticipation of future Federal Reserve actions. European markets mirrored this sentiment, with record highs in the DAX index as inflation eased more than expected, further fuelling rate cut speculations.

Key Takeaways:

  • Dow Jones Hits Fresh Record High: The Dow Jones Industrial Average climbed 243.63 points, or 0.59%, to close at a record high of 41,335.05, driven by strong performances from Goldman Sachs, Intel, and Visa. This marks a significant recovery from the recent market sell-off, showcasing robust investor confidence in the broader economy.
  • Nasdaq Falls Amid Nvidia Slide: The Nasdaq Composite slipped 0.23% to end at 17,516.43, weighed down by a 6.4% drop in Nvidia shares. Despite the company reporting a 122% year-over-year revenue growth and issuing a positive sales forecast for the next quarter, Nvidia’s shares fell due to a smaller-than-expected earnings beat, highlighting the high bar set by investors this earnings season.
  • S&P 500 Ends Flat: The S&P 500 closed just below the flatline at 5,591.96, reflecting a mixed market sentiment. The index was pulled down by the decline in tech stocks, even as economic data provided a positive backdrop with a revision of second-quarter GDP growth to 3% and a decrease in weekly jobless claims, easing recession fears.
  • European Markets Rally on Easing Inflation: European stocks saw broad gains as inflation data boosted hopes for further rate cuts by the European Central Bank. The pan-European Stoxx 600 climbed 0.74%, with Germany’s DAX index reaching a new record high above 18,900 points, driven by easing inflation, which fell to 2% in August from 2.6% in the previous month. The FTSE 100 rose 0.43% to close at 8,379.64, while France’s CAC 40 gained 0.79%. Spain’s inflation also dropped to 2.4%, below expectations, further supporting the case for potential monetary easing.
  • Asia-Pacific Markets Mostly Lower: The Asia-Pacific region largely saw declines as investors reacted to Nvidia’s results and other regional factors. South Korea’s Kospi dropped 1.02% to 2,662.28, led by a 5.35% plunge in SK Hynix and a more than 3% fall in Samsung Electronics. Taiwan’s Weighted Index fell 0.75% to 22,201.85, with major tech stocks like Taiwan Semiconductor Manufacturing Company down 2.18%. Japan’s Nikkei 225 slipped slightly to 38,362.53, while Australia’s S&P/ASX 200 declined 0.33% to 8,045.1. In contrast, Hong Kong’s Hang Seng index rose 0.47%, reversing earlier losses, as mainland China’s CSI 300 fell 0.27%, marking its lowest level in nearly seven months.
  • Treasury Yields Rise Ahead of Key Inflation Data: US Treasury yields edged higher on Thursday as investors looked ahead to critical inflation data. The yield on the 10-year Treasury increased nearly 3 basis points to 3.865%, while the 2-year Treasury yield also rose by 3 basis points to 3.895%. 

FX Today:

  • Gold Gains on Fed Rate Cut Expectations: Gold prices rose 0.73% to $2,522.02 per ounce on Thursday as investors anticipated a potential Federal Reserve rate cut in September. Focus remains on US inflation data for further clues on the Fed’s next move. Spot gold is testing resistance at $2,531.60, the August 20 all-time high. A break above this level could signal further gains towards the $2,550 target. However, if gold prices fall below $2,470, it may suggest the start of a short-term downtrend. Key support levels to watch include $2,516.70, $2,508.80, and $2,496.40. 
  • GBP/USD Slips as Dollar Strengthens: The GBP/USD pair declined to 1.3171, down 0.14%, extending its losses for the second consecutive day. The pair broke below the 1.3200 level as a stronger US dollar pressured the pound. Sellers aim for further declines, targeting support at 1.3100 and 1.3050. A move below these levels could lead the pair towards 1.3043, with the March 8 daily high at 1.2893 as the next key support. On the upside, a rebound above 1.3200 could expose resistance levels at 1.3266, 1.3293, and potentially 1.3437.
  • EUR/USD Drops as German Inflation Eases: EUR/USD continued its decline, retreating below the 1.1100 support level to find some stability around 1.1080. The pair’s downward momentum was driven by a stronger US dollar ahead of Friday’s PCE data. Should the pair break below the current support, it may test lower levels at 1.0881, 1.0852, and 1.0777. Conversely, a recovery could see the pair testing resistance at 1.1201, 1.1275, and 1.1300.
  • Canadian Dollar Holds Steady Ahead of GDP Data: The USD/CAD pair traded higher by 0.2%, ending the day at 1.3486 against the greenback. The Canadian dollar remained range-bound, trading between 1.3451 and 1.3490, as investors awaited Friday’s US inflation data and upcoming Canadian GDP figures. The pair faced resistance near the 1.3500 level, while staying well below the 200-day Exponential Moving Average (EMA) near 1.3625.
  • AUD/USD Rises on Commodity Price Strength: The AUD/USD pair increased by 0.3% to 0.6810, supported by rising commodity prices. Despite a weak Q2 capex survey and continued softness in non-mining business investment, the Australian dollar found strength from the commodities market. Technical indicators suggest further gains are possible, with resistance at 0.6830 and support around 0.6790 and 0.6770.

Market Movers:

  • Dollar General Plunges on Disappointing Guidance: Shares of Dollar General tumbled around 32% after the company slashed its sales and profit guidance for the full year. CEO Todd Vasos attributed the softer sales trends to a core customer base feeling “financially constrained.” The retailer also reported weaker-than-expected results for the fiscal second quarter, prompting a sharp sell-off in its stock. Shares of competitor Dollar Tree also fell more than 10% in sympathy with Dollar General’s downturn.
  • Affirm Soars on Strong Revenue Outlook: Affirm Holdings saw its shares surge about 32% after the company issued a stronger-than-expected revenue outlook for the fiscal first quarter. The “buy now, pay later” firm projected revenue between $640 million and $670 million, significantly above the $625 million expected by analysts. This optimistic forecast led to a robust rally in Affirm’s stock.
  • Best Buy Rallies After Raising Earnings Outlook: Shares of Best Buy jumped around 14% after the company raised its earnings outlook for the fiscal year. The electronics retailer now anticipates an adjusted earnings range of $6.10 to $6.35 per share, up from the prior range of $5.75 to $6.20 per share. Better-than-expected results for the fiscal second quarter further supported the stock’s upward momentum.
  • Nutanix Surges on Earnings Beat: Nutanix shares surged more than 20% following a strong earnings report for the fiscal fourth quarter. The cloud infrastructure company reported adjusted earnings of 27 cents per share on $548 million in revenue, surpassing analyst expectations of 20 cents per share on $537 million in revenue. This earnings beat drove a significant increase in Nutanix’s stock price.
  • Okta Plummets on Weak Billings Growth: Okta shares plunged more than 17% after the company reported lower-than-expected billings growth for the quarter. Billings came in at $651 million, below the $679 million forecast by analysts, leading to a double downgrade from Bank of America, which cut its rating from “buy” to “underperform.” This negative outlook triggered a sharp decline in Okta’s stock.
  • Birkenstock Falls on Earnings Miss: Shares of Birkenstock dropped more than 16% after the sandal company reaffirmed its full-year revenue guidance, projecting growth of about 19%, but reported fiscal third-quarter adjusted earnings below analysts’ expectations. The disappointing earnings led to a sell-off in Birkenstock’s stock.
  • Pure Storage Declines on Weak Guidance: Pure Storage shares fell 15.8% after the data storage company issued a weaker-than-expected operating income guidance for the third quarter. The company expects operating income to be around $140 million, below the $148.1 million forecasted by analysts, causing its stock to drop sharply.
  • Victoria’s Secret Drops Despite Raised Outlook: Shares of Victoria’s Secret slipped 3.7% despite the company raising its full-year outlook. The lingerie retailer now anticipates a 1% year-over-year decline in net sales, better than the previous forecast of a “low single-digit” decline. However, this revised outlook still fell short of analysts’ estimates of a 2.8% pullback, leading to a decline in its stock price.

As Thursday’s trading session concluded, the markets displayed a mixed sentiment with notable moves across various sectors and regions. While the Dow Jones Industrial Average achieved a fresh record high, driven by gains in financials and tech stocks, the Nasdaq Composite slipped due to Nvidia’s unexpected decline despite strong earnings. European markets ended higher as easing inflation sparked hopes for further rate cuts, and Asia-Pacific markets saw mixed results amid investor reactions to Nvidia’s performance. Meanwhile, gold prices edged higher on anticipation of a Federal Reserve rate cut, and currencies showed varied movements against the backdrop of a strong US dollar. As investors digest today’s data, all eyes are now on upcoming economic reports, particularly US inflation data, which could set the tone for the Federal Reserve’s next move and further shape market directions.