US close: Stocks sink into the red as Fed nerves kick in

(Sharecast News) - After a fleeting moment in positive territory, US stocks ended with heavy losses on Thursday, as the optimism surrounding tech giant Nvidia's stellar second quarter quickly faded.

The Dow Jones Industrial Average dropped 1.1% to 34,099, the S&P 500 declined 1.4% to 4,376, while the tech-heavy Nasdaq slumped 1.9% to 13,464.

Even Nvidia, which was up as much as 7% in early deals after it blew forecasts out of the water with its results, finished the session broadly flat, albeit at a record high.

Investors were exercising caution ahead of a key event in the Federal Reserve's calendar, the Jackson Hole Economic Symposium, which kicked off in Wyoming today. Markets will be keeping a close eye on reporting from the three-day conference for hints at how central bankers may view monetary policy changing in the coming months.

CMC Markets analyst Michael Hewson said: "Markets have been chopping around for several weeks now on the basis that for all the Fed's hawkish rhetoric the central bank is close to, or even at the end of its rate hiking cycle. The key question now appears to be less about how much further will rate rise, but for how long they will stay at current levels."

Fed chair Jerome Powell is due to make a speech on Friday, which will be closely watched.

Economic data came in mixed on Thursday, with the labour market showing continuing signs of strengthening while manufacturing activity continues to disappoint.

Initial claims for jobless benefits totalled 230,000 last week, down 10,000 from the previous week's level, which was revised up by 1,000 to 240,000. Analysts were expecting a level of 240,000.

Meanwhile, durable-goods orders declined by 5.2% in July, after a 4.7% gain in June. This was worse than the 4.1% drop expected and the steepest rate of decline since 2020. Excluding automobiles and planes, however, orders would have risen by 0.5%.

Nvidia impresses, but gives up gains by the close

Nvidia, a world leader in artificial intelligence computing, posted an 88% quarter-on-quarter jump in revenue to $13.5bn after the closing bell on Wednesday, smashing the $11.2bn consensus forecast. Earnings per share shot up 148% to $2.70, beating the $2.09 forecast.

Meanwhile, the company said it expects to make $16bn in the third quarter, some $3.4bn ahead of analysts' current expectations. It also added $25bn to its stock buyback programme.

Despite the massive surprise, the shares finished up just 0.1%. The stock, which had already jumped 229% so far in 2023, surged by 11% in the last five days alone and is now trading at a record closing high of $471.63.

Boeing was trading in the red after saying that it had found manufacturing flaws in its 737 Max, causing deliveries to be delayed.

Retailer Guess finished 26% higher after delivering an 85% year-on-year increase in adjusted earnings per share, and giving an upbeat outlook for the rest of the year.