Global investors awaited crucial inflation data, and the U.S. stock market continued to maintain its trend from last week. The S&P 500 index rose 0.23 points to 5344.39 points, fluctuating between small gains and losses throughout the day. The Nasdaq index rose 35.31 points or 0.21% to 16780.61 points, with Nvidia rising by 4.08%, driving the technology sector higher. The Dow Jones Industrial Average fell 140.43 points or 0.36% to 39357.01 points.
The upcoming inflation data is crucial for the market, which is still tense after recent volatility. The July Consumer Price Index (CPI) report to be released on the 14th will provide key insights into the health of the U.S. economy and determine investor sentiment following the soft nonfarm payrolls report in July.
RBC Capital Markets’ global head of stock strategy, Lori Calvasina, expressed optimism, stating that a short-term bottom had already formed or was close to forming on August 5. She noted that the S&P held important technical levels after last week’s sharp decline.
While major indices managed to recover most of the losses from the beginning of last week, Wall Street also focused on the July Producer Price Index (PPI) report released on the 13th. Retail sales data for July will be published on the 15th.
Grasso Global CEO Steve Grasso mentioned that Nvidia’s stock price could potentially return to $120 in the short term, emphasizing its momentum. Despite a more than 11% decline in Nvidia’s stock price in the third quarter, it has still risen by 121% this year. However, the closing price last week was down over 25% from its 52-week high.
Grasso acknowledged Nvidia’s large market share and solid fundamentals but stressed that overall market performance would be crucial for Nvidia to reach the $120 level. He suggested that the market must perform well for Nvidia to achieve higher prices.
Wells Fargo Securities’ head of stock strategy, Chris Harvey, highlighted significant opportunities in the communication services sector in the second half of 2024. The sector has shown corrections, presenting favorable valuations and positive trends that could benefit investors in communication service stocks and similar companies by the end of the year.
Communication service stocks have seen a 20.52% increase year-to-date, the highest among all sectors, while the S&P has risen by approximately 12% this year.
Harvey advised against investing in small-cap stocks as it could be risky due to their weak fundamentals, even with recent market rotation favoring small-cap stocks.
Aaron Dunn, a senior portfolio manager at Morgan Stanley Investment Management, anticipated a turning point in utilities demand that could drive the sector’s growth. He emphasized the importance of investments needed to meet the country’s electricity demand, particularly related to data center needs. The utilities sector has seen an 18.77% increase year-to-date, outperforming the market’s 12% return.
Timmer, the global macro director at Fidelity Investments, indicated a favorable market environment despite recent market fluctuations. He cited accelerating earnings growth and potential rate cuts in 2024 as supportive factors for the market. Timmer emphasized the positive backdrop for the stock market, despite recent instability.
Due to a significant increase in healthcare expenditures and the continued burden of high interest rates, the U.S. government’s deficit exceeded $1.5 trillion in July 2024. With a deficit of $243.7 billion this month, the total budget deficit for the year has reached $1.52 trillion, pushing the federal total debt to $35.1 trillion.
