Fed chatter, Nvidia nerves weigh on Wall St

Wall Street had a cooler start to the week with tech stocks such as International Business Machines and Salesforce leading the Dow Jones Industrial Average lower as Federal Reserve vice chair Philip Jefferson said the central bank should go slowly when it comes to rate cuts and as Nvidia’s upcoming result keeps people unsure about the booming artificial intelligence sector.

Google-parent Alphabet was one of the highlights among the Magnificent 7 megacap stocks after Berkshire Hathaway took a stake in search engine giant during a quarter when it was a net seller of stocks.

Across the Atlantic, Europe was also softer, with Germany’s DAX 30 one of the weaker performers as lender Deutsche Bank paced the decline after outlining plans to boost its profitability, with cost-cutting on the cards.

Australian futures are pointing to a soft start across the Tasman, while NZX-listed companies reporting include travel software developer Serko and fishing group Sanford.

Volatility rising

Stocks on Wall Street were weaker with all three major indices down 0.4% in late trading. IBM and Salesforce led the blue-chip Dow Jones Industrial Average lower ahead of Nvidia’s quarterly earnings on Wednesday, which is seen as a gauge on the pace of growth in AI. Nvidia was also down.

Federal Reserve vice chair Philip Jefferson’s comments that a rate cut next month isn’t a foregone conclusion and that the central bank should proceed slowly added to the aura of nervousness, with Wall Street’s fear gauge – the volatility index – spiking up 7%.

The delayed September jobs report is expected to be released on Thursday in the US, with other data due this week including home sales and consumer sentiment.

“US equities have been oscillating to kick-start the week, with the S&P500 shifting between small gains and losses,” Bank of New Zealand senior markets strategist Jason Wong said in a note.

Other US corporate earnings of note this week include retailers Walmart, Home Depot and Target.

Streaming giant Netflix dipped in late trading after adjusting for a 10-for-one stock split, while local favourite Rocket Lab fell to a two-and-a-half-month low.

The oracle speaks

Meanwhile, Alphabet hit a record, and was up 3.4% in late trading after Berkshire Hathaway’s regulatory filings showed the investment firm added Google’s parent to its portfolio in a period when it was a net seller of stocks.

Stock markets across the Atlantic were also weaker, with the UK’s FTSE 100 down 0.2% and France’s CAC 40 declining 0.6%. Germany’s DAX 30 fell 1.2%, led lower by Siemens Healthineers.

Deutsche Bank dropped 3.3% after the German lender outlined its pathway to increased profitability where it wants to scale up to take advantage of the shifts in the global economy. That three-year plan will include cost-cutting and selective exits from operations that are too small.

Australian futures are pointing to a 0.2% decline for the S&P/ASX 200 index when trading opens across the Tasman, while the kiwi dollar traded at 56.69 US cents at 7am in Auckland from 56.63 cents yesterday.

Among NZX-listed companies reporting today, online travel company Serko is expected to report a first-half result in line with expectations, while industry data provided scope for fishing group Sanford’s annual result to outperform.

Commercial landlord Precinct Properties NZ and winemaker Foley Wines are also holding their annual meetings today.

And local data today include the Reserve Bank’s business expectations survey.

Reporting by Paul McBeth. Image from Karollyne Videira Hubert on Unsplash.