US Market Weekly Wrap: DJIA, S&P 500 Rose 1%, Nasdaq Outperforms; Nvidia, Warsh's Jackson Hole Speech Impacted

The US stock market ended the trading week of August 24th to August 29th on a positive note, with the Nasdaq Composite index outperforming its counterparts. The Dow Jones and S&P 500 managed to scratch nearly 1% gains each. The week was impacted by Nvidia earnings, the US Fed's Jackson Hole summit, and geopolitical uncertainties in the Middle East. On Friday, however, the Wall Street benchmarks traded broadly volatile as chipmakers witnessed selling pressure and Kevin Warsh delivered a more hawkish speech.

US Stock Market On August 29

The Dow Jones Industrial Average, or DJIA, closed at 53,559.99 on Friday, marginally down. The S&P 500 index was also in red, ending at 7,711.76 with a downside of 19.23 points. But the Nasdaq Composite index underperformed with a 138.93-point, or 0.52%, decline to close the week at 26,402.42.

Explaining the latest performance, Trading Economics data revealed that the US stock market faced selloffs as chipmakers' shares trimmed the previous session's gains and a more hawkish tone from Fed Chair Warsh strengthened expectations for a rate hike next month.

Among stock-specific actions, Marvell crashed over 10% despite an upbeat quarterly earnings and raising its outlook ahead. Among chipmakers, Nvidia dropped 5% even when reporting overwhelmingly better-than-expected Q2 results. AMD was down over 2%, while Broadcom slipped nearly 1%.

However, in Magnificent 7, Meta gained over 15, Amazon zoomed 4%, Microsoft jumped nearly 2% and Alphabet surged around 1.5%. The performance limited the downside in Wall Street benchmarks.

US Fed Kevin Warsh's Jackson Hole Speech

"To get policy right, we also need to get the relationship right between financial markets and the central bank. The Fed needs clear market signals, as unfiltered as possible . . . from market internals . . . the level and change in asset prices across sectors . . . the prices and trading volumes of Treasury securities. . . the foreign exchange value of the dollar . . . the cost and availability of credit . . . and the price of a broad set of commodities," Warsh said in his speech.

He added, "These and other indicators should inform the Fed's near-term outlook on economic activity and inflation throughout the business cycle. They should also reveal the state of broader financial conditions . . . and the risks and uncertainties in the financial cycle."

Warsh said, "on the price-stability side of our mandate, the numbers are more concerning."

"The recent rise in overall commodity prices also bears watching. What we need to judge is whether trends indicate upside inflation risks," he said.

For equity market, Warsh said they're volatile.

He said, "For firms in the S&P 500, profits have grown by more than 20 percent over the past year. Profit margins are quite elevated, relative to history. Overall equity market volatility is low. We're staying keenly focused on market internals, watching performance across sectors."

US Stock Market Weekly Performance

Despite the latest performance, all three indices on Wall Street recorded weekly gains. Nasdaq outperformed Dow Jones and S&P 500.

From August 24-29, Dow Jones' weekly gains is around 298.04 points or 0.6% and S&P 500 index surges 48.38 points or 0.63%. While the tech-heavy index, Nasdaq Composite, outperforms with 337.10 points or 1.3% upside.

For the weekly performance, Nathan Peterson, Director of Derivatives Research at Charles Schwab said, overall, the weekly range on the major indices, along with total daily volume, was relatively tight and light, which is common during the summertime.

The strategist pointed out that overall the week was surrounded around Nvidia results and Jackson Hole speech.

" Warsh delivered a slightly hawkish speech, as evidenced by the move up in rate hike probabilities, but markets have been taking it in stride," he said.

On the West Asia conflict, Peterson in his note said, earlier this week the U.S. Department of the Treasury launched an economic campaign against the Islamic Republic of Iran and its enablers, dubbed "Operation Economic Outcast". The objective, according to the department, is to "sever every economic lifeline that sustains this tyrannical regime until Tehran stands alone.

US Q2 Earnings Finishes?

According to Charles Schwab data, the Q2 earnings season is essentially finished, as 485 of the S&P 500 companies have reported results.

Data reveals that from the 485 companies, 69% have beaten estimates on the top line, while 88% have surpassed estimates in the bottom line.

What has been noteworthy is EPS growth, which is tracking at 52% and revenue growth at 14.99%. When excluding one-time investment gains from mega-cap tech, the EPS growth rate for the S&P 500 is tracking 26-29%, which is still exceptionally strong, according to Peterson.

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