Stocks Were Mixed Yesterday, All Eyes On This Morning's PCE Inflation Report

Market Moves You Need to See Stocks Were Mixed Yesterday, All Eyes On This Morning's PCE Inflation Report [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks Were Mixed Yesterday, All Eyes On This Morning's PCE Inflation Report Stocks closed mixed yesterday. After strong gains across the board in the morning, the indexes finished unevenly by the close. The Dow, the small-cap Russell 2000 and the mid-cap S&P 400 were higher. But the S&P 500 was essentially flat, and the Nasdaq ended modestly lower. While some were bracing for a wild ride in NVIDIA yesterday, following Wednesday afternoon's earnings, they finished just -6.38% lower. But it should be noted that their earnings were stellar: positive EPS and sales surprises, triple-digit growth rates for both earnings (152%) and sales (125%), raised guidance, and a huge buyback announcement. Simply put, after a massive run-up so far this year (up 184% at their best), the inevitable profit taking and position squaring set in. But with numbers like these, and new chips on the way, which are expected to add billions more in additional sales, NVDA and the AI trade are alive and well. In other news, yesterday's second estimate for Q2 GDP came in better than expected at 3.0% vs. the initial estimate of 2.8%. Weekly Jobless Claims fell -2,000 to 231K vs. views for 230K. Retail Inventories rose 0.8% m/m vs. last month's upwardly revised 0.9% (from 0.7%). And Wholesale Inventories rose 0.3% m/m vs. last month's downwardly revised 0.1% (from 0.2%). The Pending Home Sales Index was off -5.5% m/m vs. last month's 4.8% and estimates for 1.1%. The index itself came in at 70.2 vs. last month's 74.3. And Corporate Profits (after-tax) rose to 11.2% y/y vs. last month's 10.0% pace. With inventory & consumption adjustments, it was up 6.6% vs. last month's 5.3%. We also got plenty of earnings. Before the open, Best Buy reported a positive EPS surprise of 16.5%, and a positive sales surprise of 0.63%. They were up 14.1% in the regular session. After the close we heard from Marvell Technology (positive EPS surprise of 16.5%, and a positive sales surprise of 1.79%, sending shares up 8.10% in after-hours), and MongoDB (positive EPS surprise of 45.8%, and a positive sales surprise of 3.28%, sending shares up 12.5% in after-hours), to name a few. We'll get another 52 companies on deck to report today. And we'll get economic reports on the Chicago PMI, and Consumer Sentiment. But the report everybody is really waiting for is this morning's Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation gauge. The headline number is expected to increase by 0.2% m/m vs. last month's 0.1%, while the y/y rate is expected to come in at 2.5%, which is in line with last month. The core rate (ex-food & energy) is expected to rise by 0.2% m/m, just like last month. The y/y rate is forecast to come in at 2.7% vs. last month's 2.6%. Even though it's a near certainty that the Fed will cuts rates next month, today's report is important and could help shape what happens after September. That comes out at 8:30 AM ET. Next Monday, 9/2 is Labor Day, which means the markets will be closed. So, next week will be a shortened trading week. But we could see bit of extra volatility today as investors square up positions ahead of the 3-day holiday weekend. As it stands, with one more day to go, the Dow is up for the week, while the others are in the red. But they are close enough to where one good day could put them all in the green by day's end. Enjoy the 3-day Labor Day weekend. See you on Tuesday. 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