Update Equities: New all-time high for S&P 500

The returns of the major indices for equity markets for this week show a rather mixed picture. In the US, the S&P 500 had modest gains, while the MSCI Europe index was down approximately 1% at the time of writing.
Meanwhile, the more growth and technology tilted NASDAQ index outperformed the S&P 500 index this week. On Wednesday, the S&P 500, closed at the 6481 level, a new all-time high. Equity markets returns are supported by an increasing belief that the Federal Reserve (Fed) may cut interest rates in September.
Last week at the Jackson Hole conference, Fed Chair Jerome Powell signalled openness to possible interest rate cuts. Powell emphasised that the decision to cut rates will depend on how the inflation and unemployment evolve. Growth-related stocks, in particular, tend to benefit from lower interest rates, which partly explains the outperformance of the NASDAQ this week.
As the second quarter earnings season is nearing the end, all eyes were on Nvidia’s highly anticipated results, released after market close on Wednesday. Nvidia is one of the darlings of investors, thanks to its unique position in the market for artificial intelligence (AI) chips. The company derives roughly 50% of its revenue from major cloud providers such as Microsoft, Google and Amazon. These firms had already communicated significant capacity extension investments, resulting in a bullish growth outlook for AI chips in the coming quarters. Therefore, the expectations for Nvidia’s quarterly results were high.
Nvidia delivered solid results, with both sales and earnings per share slightly ahead of market forecasts. However, Nvidia presented a revenue outlook for the current period, while in line with analysts’ expectations, it suggested a deceleration in growth following a two-year boom in AI-related spending.
Nvidia experienced a modest sell-off in after-hours trading, likely due to near-term revenue forecast not exceeding consensus estimates by as much as in the recent quarters. However, third-quarter guidance of USD 54 billion would represent an impressive 54% year-over-year growth. Importantly, the guidance exclude any H20 chips revenue sold to China.