Stock market news today: Stocks rally after Fed decision, Nvidia surges

Stocks drifted higher amid Fed chair Jerome Powell's press conference in which he noted a September rate cut is "on the table."

The S&P 500 (^GSPC) rose by 2% while the tech-heavy Nasdaq Composite (^IXIC) soared about 3.1%. The Dow Jones Industrial Average (^DJI) rose a more modest 1%.

Meanwhile, the small-cap Russell 2000 (^RUT) index rose about 0.8%.

Wed, July 31, 2024 at 7:41 PM GMT+1

Markets are widely expecting the Federal Reserve to cut interest rates at its September meeting.

But when asked specifically if the market's expectations are accurate, Powell declined to commit to a September cut.

"We have made no decisions about future meetings and that includes the September meeting," Powell said. "The broad sense of the committee is that the economy is moving closer to the point at which it will be appropriate to reduce our policy rate."

Powell said "more" good inflation data remains the key for the Fed.

Wed, July 31, 2024 at 7:10 PM GMT+1

In a widely anticipated move, the Federal Reserve held interest rates steady but hinted that it is drawing nearer to a rate cut as it makes more progress toward its goal of getting inflation down.

Yahoo Finance's Jennifer Schonberger reports:

The central bank voted to keep its benchmark interest rate in a range of 5.25%-5.50%, a 23-year high. The decision was unanimous.

The fed funds rate has been in this range since last July as part of the Fed’s aggressive campaign to tamp down inflation that ballooned during the pandemic.

But Fed officials hinted they are getting closer to the confidence needed to lower rates as inflation continues to cool and the job market slows, making a cut at its next meeting on Sept. 17-18 increasingly likely.

“In recent months there has been some further progress towards the Committee’s 2% inflation objective,” officials said in their policy statement. It was a change from the "modest further progress" cited in the prior statement at the Fed's last meeting.

They also noted that the risks to both sides of their dual mandate — inflation and full employment — “continue to move into better balance” — a change from “moved toward better balance.”

“The outlook is uncertain and the Committee is attentive to the risks to both sides of its dual mandate,” the statement read.

Wed, July 31, 2024 at 6:47 PM GMT+1

Stocks slid slightly from the high-water mark of Wednesday's trading action as the Federal Reserve's latest policy decision loomed at 2 p.m.

The S&P 500 (^GSPC) rose by 1.4% while the tech-heavy Nasdaq Composite (^IXIC) soared more than 2.1%. The Dow Jones Industrial Average (^DJI) rose a more modest 0.5%.

Meanwhile, in the bond market, the 10-year Treasury yield dropped about 3 basis points to 4.11%, its lowest level since March.

The Federal Reserve is widely expected to hold interest rates steady at the conclusion of its policy meeting on Wednesday while opening the door to a September cut if inflation continues to show progress.

Investors will be watching for clues about the path forward in a post-meeting statement from Fed officials and a 2:30 p.m. ET press conference with Federal Reserve Chair Jerome Powell.

Wed, July 31, 2024 at 6:16 PM GMT+1

The pay gap between job stayers and job changers narrowed in July in the latest sign that the US labor market is cooling.

New data from ADP released Wednesday showed that the median year-over-year pay increase for job switchers fell to 7.2% in July, down from the 7.7% increase seen in June. Meanwhile, pay for workers who stay in the same job rose 4.8%, its slowest rate of increase since July 2021.

The gap between the two numbers is slimming, indicating the benefits workers saw from leaving their jobs during the post-lockdown hiring boom continue to erode.

"The payoff from switching jobs has dropped tremendously," ADP chief economist Nela Richardson said on a call with reporters Wednesday morning.

While it may be a less attractive outcome for workers, Richardson added the easing in wage growth is a welcome sign for the Federal Reserve in its fight against inflation.

"Wages and pay are the bridge from the labor market to the inflation data, and we are certain, after three years of looking at these numbers, that if inflation picks up — and no one thinks that's likely right now — it won't be because of labor," Richardson said. "We're seeing continued steady declines in wage growth that fits with the overall inflation picture also cooling, along with the labor market."

Wed, July 31, 2024 at 5:43 PM GMT+1

Oil surged on Wednesday amid concerns of a widening war in the Middle East following the assassination of a Hamas leader in Iran.

West Texas Intermediate (CL=F) jumped more than 3% just north of $76 per barrel. Brent (BZ=F) the international benchmark price, gained more than 2% to hover above $80 per barrel.

The jump came after Hamas leader Ismail Haniyeh was killed in Tehran, flaring ongoing tensions and raising concerns over the risk of a supply disruption in the region. Iran produces roughly 3 million barrels of oil a day.

“I think over the near-term prices continue to be stuck in a range with Brent crude oil around $80 per barrel and WTI a few dollars less,” Andy Lipow, president of Lipow Oil Associates, told Yahoo Finance on Wednesday.

Prices were also supported by the latest US government data showing a fifth straight week of inventory declines.

OPEC+ will hold an online meeting on Thursday. Traders are assessing whether the oil alliance led by Saudi Arabia will move forward with previously announced plans to unwind some of its voluntary cuts starting in October.

“If OPEC meets tomorrow and continues to look toward rereleasing crude from 4Q 2024 on, we'll see a sharp drop in the last 120 days of the year,” OPIS global head of energy analysis Tom Kloza told Yahoo Finance.

Wed, July 31, 2024 at 5:06 PM GMT+1

Stocks are roaring on Wednesday, but a recent hot trade on Wall Street isn't fully a part of the party.

The small-cap Russell 2000 index (^RUT), which has rallied nearly 10% in the past month as investors have grown more optimistic about Fed rate cuts, is up a more modest 0.8% on Wednesday.

This compares to the roughly 1.6% gain in the S&P 500 (^GSPC) and a 2.5% surge in the Nasdaq Composite (^IXIC).

The rally in large-cap tech is largely attributable to renewed faith in the AI trade, and comes counter recent market action in which the Russell 2000's year-to-date gains had nearly caught up to the Nasdaq 100's.

Movement in small caps will be particularly in focus after Federal Reserve Chair Jerome Powell's press conference Wednesday afternoon as investors will look to see if a dovish Powell furthers the rotation toward areas outside of tech.

Wed, July 31, 2024 at 4:11 PM GMT+1

Nvidia (NVDA) stock rallied more than 10% on Wednesday following better than expected guidance from peer AMD (AMD) and a bullish call from analysts at Morgan Stanley following a more than 20% drop in the stock.

AMD's quarterly results out late Tuesday quelled some concerns that AI trade may have run its course as investors rotated out of Big Tech over the past month, as the company beat expectations on the top and bottom line and posted a better-than-expected outlook for the third quarter.

AMD stock rose as much as 6% in early trading.

Chip peers including Broadcom (AVGO), Micron (MU), Taiwan Semiconductor (TSM), ASML (ASML), and Super Micro (SMCI) were also rallying on Wednesday.

Nvidia stock was also boosted on Wednesday by a note out from Morgan Stanley analysts led by Joseph Moore, who moved the stock to a 'Top Pick' after a recent pullback from record highs reached in June.

The firm wrote the roughly 25% in Nvidia stock "selloff presents a good entry point as we continue to hear strong data points short term and long term, with overblown competitive concerns."

Read more here.

Wed, July 31, 2024 at 3:22 PM GMT+1

The Nasdaq Composite (^IXIC) is up more than 2.4% on Wednesday and pacing for its best day since February.

The revival in tech stocks began late Tuesday night after chip giant AMD (AMD) surprised Wall Street to the upside with its second quarter earnings showing stronger-than-expected revenue, largely driven by the company's AI efforts. Shares in AMD rose more than 7% in early trade Wednesday.

The report sparked a rally among chip stocks. The PHLX Semiconductor index (^SOX) rose more than 5%. The largest chip stock, Nvidia, rallied more than 10% following the report as Morgan Stanley released fresh research noting the recent 25% drawdown in the stock presents "a good entry point," and listed the stock is a "top pick."

Wed, July 31, 2024 at 3:00 PM GMT+1

Rising inventory is shifting the housing market in buyers' favor.

Pending home sales, a forward-looking indicator of home sales based on contract signings, rose 4.8% in June from the month prior, according to the National Association of Realtors. Economists polled by Bloomberg had expected a 1.5% monthly increase.

“The rise in housing inventory is beginning to lead to more contract signings,” NAR chief economist Lawrence Yun said in a press statement. “Multiple offers are less intense, and buyers are in a more favorable position.”

The jump in buyer activity suggests that more is likely to follow.

“Even more inventory is expected to come onto the housing market in the upcoming months ahead of the normal, seasonal declines in the winter,” added Yun. “The Northeast’s small gain in contract signings is due to the ongoing housing shortage situation in that region, leading to stronger home price gains. It is a good time to list.”

Mortgage rates have been a point of distress for homeowners to sell, as many were locked in at ultra-low rate during the pandemic. But rates havecome down since they topped 7% earlier this summer.

However, some buyers are still waiting on the sidelines as home pricesreach new highs. Applications for a mortgage to purchase a home fell 2% from the prior week on a seasonally adjusted basis, the Mortgage Bankers Association reported Wednesday.

“Borrowers may be waiting for signs that mortgage rates will drift lower as the Federal Reserve begins to cut short-term rates,” Mike Fratantoni, MBA's SVP and chief economist, wrote in a statement.

Wed, July 31, 2024 at 2:35 PM GMT+1

US stocks rallied on Wednesday amid a tech revival that sent the Nasdaq surging as investors prepared for the Federal Reserve's decision on whether to cut interest rates.

The S&P 500 (^GSPC) rose by 1.5%, while the tech-heavy Nasdaq Composite (^IXIC) soared more than 1.8%. The Dow Jones Industrial Average (^DJI) rose about 0.1%.

Tech stocks are in the ascent again after taking a battering in recent days. The first earnings from "Magnificent Seven" megacaps stirred fears the AI boost would prove a bust after falling short of high hopes.

A swathe of positive news is spurring a premarket comeback for chip stocks, with AMD (AMD) shares getting a boost from an AI-driven earnings beat.

Nvidia (NVDA) climbed over 7%, regaining ground lost in a steep drop on Tuesday, in the halo of the results. Also, on Wednesday, Morgan Stanley noted that the recent 25% drawdown in Nvidia stock presented a "good entry point," marking a sentiment shift in what's been an otherwise tough July for the AI leader.

Wed, July 31, 2024 at 1:34 PM GMT+1

The US economy added fewer private payroll jobs than expected in July.

The latest data from ADP showed 122,000 private payroll jobs were added in July, falling short of consensus expectations for 150,000 additions.

Also out Wednesday morning, ADP's latest pay insights showed that the median year-over-year pay increase for job switchers fell to 7.2% in July, down from 7.7% in June. Pay gains for job stayers grew at a 4.8% pace in July, its lowest late in about three years, per ADP's chief economist Nela Richardson.

Wed, July 31, 2024 at 10:24 AM GMT+1

I would be paying attention to how CEOs and CFOs discuss the outlook for taxes on their earnings calls for the balance of the year.

Taxes play an integral part in if companies undertake a project, a deal or more hiring. Best believe management teams and boards are running through scenarios if the Trump tax cuts aren't extended in 2025.

Here's Procter & Gamble (PG) chair and CEO Jon Moeller to me on Yahoo Finance yesterday on the 2017 Trump tax cuts:

On their impact: The tax cuts have been "incredibly impactful. And you know, that element of the dialogue is going to increase as we get through the election and start talking about 2025 when some of the tax provisions that were passed in 2017 sunset. But if you just look at our investment in the US pre- and post- the 2017 act, it's up significantly, our employment is up significantly, and, importantly, our taxes — the taxes we're paying to the US government — are up significantly. So it's really led to significant economic activity in this country."

On if the tax cuts aren't extended: "It will certainly have an impact. Every decision that we make is based on the present value of discounted cash flow. And that's on an after-tax basis. And so it begins favoring on a comparative basis, other locations for investment. So yes, it will have an impact."

Wed, July 31, 2024 at 10:19 AM GMT+1

Shares of Advanced Micro Devices (AMD) are back in the good graces of Wall Street this morning after earnings last night, with the stock up 9% in the premarket.

I think the Street is locking in on AMD's upwardly revised guidance on demand for its new AI chip.

A key call-out by Citi analyst Chris Danely:

Wed, July 31, 2024 at 10:16 AM GMT+1

Microsoft (MSFT) shares are rallying back a bit in the premarket after initially dropping 6% last night following earnings, in part because of a surprise slowdown in Azure growth. As of this writing, shares are down about 3%.

The company guided to another quarter of slower Azure growth, but then things improving over the next 12 months.

Good point by Guggenheim analyst John Difucci on this rosy Azure outlook:

Wed, July 31, 2024 at 10:11 AM GMT+1

Starbucks (SBUX) shares are up 3% pre-market post a horrendous quarter last night.

To illustrate how horrendous:

• US same-store sales down 2%, with transactions down 6% (Citi is calling this "alarming").

• China same-store sales plunged 14%, and missed consensus.

• International same-store sales fell 7%.

So why the stock pop?

Well, Starbucks CEO Laxman Narasimhan hopped on his earnings call and shared a bunch of obscure stats suggesting sales and margin trends would improve in a few quarters. He also teased a potential cost-savings action in China, likely through inking a joint venture deal.

Be careful chasing any Starbucks enthusiasm. This is a management team with a credibility problem with investors, and is dealing with deeply rooted issues such as unions and poor value perception among customers. The end-game on the new battle with activist Elliott Management is also wildly unknown.