Wall Street today: Tech-rich Nasdaq leads US stocks after Q2 GDP expands 3% on consumer spending; Nvidia slips 3%

Wall Street today: The tech-heavy Nasdaq led Wall Street's main indexes higher on Thursday, August 29, after official data showed that the US economy rose three per cent in the second quarter, which lifted US Fed rate cuts bets for September. However, shares of artificial intelligence chip major Nvidia slipped as its largely in-line forecast failed to meet investors' lofty expectations.

At 11:45 a.m. ET, the Dow Jones Industrial Average was up 289.54 points, or 0.70 per cent, at 41,380.96, the S&P 500 was up 39.02 points, or 0.70 per cent, at 5,631.20, and the Nasdaq Composite was up 182.80 points, or 1.04 per cent, at 17,738.82. A Commerce Department report showed the US economy grew faster than Wall Street estimates amid strong consumer spending. 

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US jobless claims were marginally lower than expected for the previous week. Friday's Personal Consumption Expenditures data for June could offer hints on the US Federal Reserve's monetary policy easing trajectory. According to CME Group's Fed Watch Tool, the odds of a 25-basis-point slash in September are 67.5 per cent, while those of a 50-basis cut are 32.5 per cent.

US stocks today

In the run-up to Nvidia's results, markets have swung between marginal gains and losses this week as traders waited to see if the company would sustain its unmatched revenue growth. Nvidia's largely in-line revenue forecast for the current quarter disappointed investors despite upbeat second-quarter results. 

The chip bellwether's shares were down 3.2 per cent. Semiconductor peers Broadcom and Advanced Micro Devices rose 1.7 per cent and 1.1 per cent, respectively, aiding a 1.6 per cent rise in the Philadelphia SE Semiconductor index.

Also Read: Nvidia approves buyback of shares worth $50 billion; stock drops 2% despite strong results

Nvidia's heavyweight megacap customers, which have been the focus of market euphoria on the prospect of artificial intelligence integration boosting corporate profits, also rose with Microsoft, Meta and Alphabet up more than 1.5 per cent each. Apple gained more than 2.4 per cent after Citigroup selected the iPhone maker as its top AI pick over Nvidia. This helped the tech sector gain 0.9 per cent.

Communication services led broader gains, with nine out of 11 sectors trading higher on the benchmark index. The benchmark S&P 500 is about 0.6 per cent away from a record high, while the Dow was at an all-time peak, as expectations for a September interest rate cut stayed robust. CrowdStrike gained 4.6 per cent after the cybersecurity company beat quarterly revenue estimates.

Dollar General Inc. shares plummeted the most on record after the discount retailer reduced its full-year sales forecast. The firm's chief executive officer said customers are cutting back on essential goods after years of rising costs for other expenditures such as rent and health care.

“Inflation has continued to negatively impact these households, with more than 60 per cent claiming they have had to sacrifice on purchasing basic necessities,” CEO Todd Vasos said on a call with analysts. Dollar General also cut its 2024 profit view.

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The stock tumbled 29 per cent at 11:56 a.m. in New York, the biggest decline since Dollar General went public in 2009. The decline adds to a nearly nine per cent drop this year through Wednesday. Shares of competitor Dollar Tree Inc., which reports earnings next week, fell about 10 per cent.

European stocks rose 0.75 per cent after hitting a record high powered by technology shares. MSCI's gauge of stocks across the globe rose 0.28 per cent to 829.66. The yield on benchmark US 10-year notes rose 2.6 basis points to 3.867 per cent.

Also Read: Nvidia share price declines 7% in extended trade after Q2 results, $50 billion buyback

The US dollar rose after GDP data. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, gained 0.52 per cent at 101.53, with the euro down 0.53 per cent at $1.1061. Gold climbed and was just shy of notching another record high. Spot gold added 0.51 per cent to $2,514.89 an ounce. US gold futures gained 0.63 per cent to $2,518.30 an ounce.

With inputs from Bloomberg, Reuters