Tech in the Spotlight: Nvidia Earnings, Arm's IPO and Tesla's Market Slide
What to look for this week
- Market Struggles: Equities decline, bonds face pressure, Nvidia's earnings and Arm's IPO draw attention.
- Economic Watch: Housing sales, Federal Reserve meeting, and Zoom's earnings set to influence market dynamics.
- Volatility Returns: VIX rise hints at potential September turbulence; Tesla's slump underscores market challenges.
The past week delivered another round of challenges for the equity markets, as the S&P 500 experienced a notable 2.1% drop, paralleled by the Nasdaq Composite shedding nearly 2.6%. As the curtain drew on the week's trading, the S&P found itself down almost 5% this month, while the Nasdaq Composite faced a more substantial setback of nearly 7.5% for August. However, equities weren't the only realm facing volatility, as bonds bore the brunt of impact with benchmark 10-year interest rates hovering just below 4.25%.
Although the earnings season is winding down, a significant name is set to report earnings this week, accompanied by an array of economic indicators, all culminating in the annual Federal Reserve meeting at Jackson Hole. The tech world's beloved Nvidia (NVDA) is slated to announce its financial results after Wednesday's market close. Nvidia's prominence in the AI field has been a driving force behind its success, with its chips playing a pivotal role. Having closed at just under $433 on Friday, the stock carries an anticipated weekly volatility range of +/- $50.
Another intriguing player to keep an eye on is Arm Ltd. While not yet a publicly traded entity, Arm is expected to make its public debut through an IPO scheduled for September. This move would mark the most substantial IPO since Rivian's (RIVN) public entry in 2021. Arm's ambitions point to raising capital of between $8 billion and $10 billion, aiming for a market capitalization within the range of $60 billion to $70 billion.
The economic landscape isn't lacking in significant events either, with various critical reports in the queue. Of particular interest is the existing home sales report, which will provide insight into the resilience of the housing market in the face of mounting interest rates. With projections indicating mortgage rates could reach as high as 8%, the real estate sector's adaptability will be closely scrutinized. As the week progresses, the culmination arrives with remarks from Federal Reserve Bank Chairman Jerome Powell at the conclusion of the Jackson Hole meeting. Although no official interest rate adjustments are expected this month, the market anticipates the Fed will keep rates unchanged during its upcoming September meeting.
In the earnings arena, Zoom (ZM) commands attention as it prepares to disclose its financial performance after market hours. Amid these developments, market volatility maintains its grip on investor attention. The VIX, a key gauge of market volatility, settled at 17.30 at Friday's close and is indicated at 17.73 in premarket trading. A month ago, the VIX hit a low of 12.74, marking a nearly 40% increase in just weeks. This uptick in volatility might signify that markets are bracing for a potentially turbulent September. Notably, market leaders such as Tesla (TSLA) have already experienced considerable losses, with the electric vehicle giant's shares tumbling by 19% within this month alone.
In these uncertain waters, the guiding principle remains the same: adhering to one's investment plans and long-term objectives. These insights are provided for educational purposes, and do not constitute trading or investment advice, nor is it a recommendation for any specific investment product or strategy.
JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan
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