Ines Ferré
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Stock market today: Nasdaq leads stocks higher as investors weigh Nvidia earnings, latest GDP print
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The Nasdaq led US stocks higher on Thursday, as investors assessed Nvidia's (NVDA) earnings and data showing the US economy grew more than expected.
The Dow Jones Industrial Average (^DJI) was up 0.3% to eye a return to setting record highs. The tech-heavy Nasdaq Composite (^IXIC) rose more than 1%, while the S&P 500 (^GSPC) moved up roughly 0.5% on the heels of losses for all three gauges.
Stocks are taking a positive sheen amid Wall Street's lackluster reception for the numbers from Nvidia, whose stellar growth streak has underpinned the market's rally this year.
While the AI chipmaker's quarterly profit and revenue guidance topped estimates, the size of the beats fell short of high-running hopes. That started to stir questions as to whether the AI boom has peaked and initially dragged Nvidia's stock down 6%, though shares pared those losses by the open.
Elsewhere in earnings, Salesforce (CRM) shares popped after a big earnings beat by the software maker. Meanwhile, Dollar General (DG) shares tanked 25% after the retail chain cut its full year outlook and partially blamed softer sales in the second quarter on "financially constrained" customers.
The US economy grew at a stronger pace than expected in the last quarter, according to a reading of gross domestic product released on Thursday. Second-quarter GDP increased at an annual rate of 3%, up from a prior estimate of 2.8%.
Meanwhile, weekly US jobless claims came in at 231,000, a decline from the prior week, and lower than 232,000 expected by economists.
The market is closely watching economic data for a steer on how fast and deep the Federal Reserve will lower interest rates, now that Chair Jerome Powell has clearly flagged a cut is coming in September.
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Nvidia shares fall 2%, while the rest of semis rise
Nvidia (NVDA) shares dipped 2% in early trading while the rest of the semi-conductor space mostly rose on Thursday, helping lift the Nasdaq higher.
Nvidia's quarter was strong but it didn't live up to exceptionally high Wall Street expectations. Shares declined as much as 6% in after-hours after the company's quarterly results on Wednesday. The stock pared those declines by the market open.
Much of Wall Street remained positive following the results, pointing out the strong quarter and brushing mostly brushing off uncertainty surrounding the ramp of Nvidia's next generation chip Blackwell.
"We cover the stock very, very closely. Blackwell is not a concern. If anything its extremely bullish," Beth Kindig, I/O Fund Lead Tech Analyst told Yahoo Finance on Thursday morning.
"Now the valuation when you have a high flyer like Nvidia, can get stretched sometimes. Going into the print, we warned our members that this valuation is looking a little toppy," she added.
Nvidia was the laggard in semiconductors on Thursday. Dow, S&P 500, Nasdaq rise while Nvidia shares fall slightly
US stocks gained on Thursday, with the Dow leading the advance after Nvidia's (NVDA) strong quarterly results failed to impress investors and the latest GDP data showed the US economy grew more than expected last quarter.
The Dow Jones Industrial Average (^DJI) rose 0.7% to eye a return to setting record highs. The tech-heavy Nasdaq Composite (^IXIC) gained 0.5%, while the S&P 500 (^GSPC) moved up roughly 0.3% on the heels of losses for all three gauges.
Nvidia shares fell slightly after the AI chip heavyweight posted better than expected results, but still failed to impress investors.
The stock had fallen as much as 6% in pre-market but regained much of those losses by the open. Shares fell roughly 2% in early trading.
Meanwhile, the US economy grew at a stronger pace than expected in the second quarter, according to the latest gross domestic product print released on Thursday morning. GDP increased 3% on an annualized basis for the three month period, up from a prior reading of 2.8%
Dollar General tanks 25% in pre-market amid outlook cut, company cites "financially constrained" customers
Dollar General (DG) shares tanked 25% in pre-market on Thursday after the low-cost retailer cut its full year outlook and partially blamed softer sales in the second quarter on "financially constrained" customers.
Dollar General posted adjusted earnings per share of $1.70, versus expectations of $1.79, alongside revenue of $10.21 billion, just under the $10.36 billion expected by Wall Street.
The company has been undergoing a "Back to Basics" improvement plan at the helm of CEO Todd Vasos, who returned to Dollar General last year.
The latest quarterly results highlighted pressure on the lower-income consumer.
“While we believe the softer sales trends are partially attributable to a core customer who feels financially constrained, we know the importance of controlling what we can control," the company said in its earnings release.
"With the evolving retail and consumer landscape in mind, we are taking decisive action to further enhance our value and convenience offering, as well as the in-store experience for our associates and customers."
HP logs another challenging quarter
Mixed quarter at best for computer and printer giant HP Inc (HPQ).
The company continued to see pressure in its printing business, in part because of the ongoing work-from-home dynamic. Meanwhile, the AI PC ramp has yet to take hold and remains a lot of hype.
"HPQ results held signs of a PC market recovery in the strength of the Commercial PS segment being enough to offset the weaker revenue outcomes in Consumer PS as well as Print to deliver modestly better revenue in F3Q. However, the macro headwinds are driving softer results in the other segments, which is in turn is impacting margins, and leading to a modest moderation in the earnings outlook for F4Q and FY24 relative to prior expectations," said JP Morgan analyst Samik Chatterjee in a client note.
I caught up with HP CEO Enrique Lores last night. You can watch part of that chat below. Take note of what Lores said about the spread and impact of AI. I think a lot of cost-cutting is coming to Corporate America next year because of AI, and we are seeing signs of it already (check out the mass layoffs recently announced at TurboTax seller Intuit (INTU)).
Nvidia quick take
Nvidia (NVDA) shares are getting hit pre-market as the quarter didn't live up to super high Wall Street expectations.
But the earnings call sure did, I think. There was no indication from the call that demand is slowing, actually quite the contrary. Everything Nvidia talked about suggested a further acceleration in demand for its high-powered AI chips.
That said, I am seeing the Street tweak estimates this morning amid higher expenses related to the production ramp for Blackwell chips.
Good points here by Ruben Roy over at Stifel:
"Blackwell production ramp is scheduled to begin in F4Q, with expectations for several billion dollars in revenue in that quarter followed by volume increases to continue into F2026. In the near-term, higher operating expenses and modestly lower gross margin (new product mix) will moderate EPS growth. Bigger picture, the modernization of data center compute continues and, in our view, NVDA remains the primary beneficiary."
Salesforce aims to better monetize AI
Salesforce (CRM) shares are on the move higher following a comeback quarter after the close.
I caught up with Salesforce chairman and CEO Benioff, and came away very interested in the company's new "agents" that it will begin deploying within companies. These will basically be AI-powered robots that interact with humans to, say, close deals and upsell.
Interestingly, Salesforce will charge clients per conversation for the product — which could add up to real money.
Here is my full chat with Benioff following his earnings call last night.
