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Indexes up: Dow 0.24%, S&P 500 0.22%, Nasdaq 0.21%
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Fed's Williams open to rate cuts depending on data, report
says
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J.M. Smucker falls after quarterly profit miss
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MongoDB ( MDB ) soars after raising annual profit forecast
(Updates with late morning prices)
By Johann M Cherian and Sanchayaita Roy
Aug 27 (Reuters) -
The main U.S. stock indexes inched higher on Wednesday, as
investors braced for
earnings
from AI-chip leader Nvidia ( NVDA ) that are expected to test the
momentum of Wall Street's technology-fueled rally.
Nvidia ( NVDA ) was at the forefront of the market recovery after
April's lows, crossing the $4-trillion market capitalization
mark in July on global enthusiasm around artificial-intelligence
to become the world's largest corporation.
Traders worry that companies in the S&P 500 technology index
- which accounts for about 34% of the S&P 500 - might be
overvalued. Valuations of the benchmark index are well above
long-term averages, according to data compiled by LSEG.
The concerns weighed on tech stocks last week, after OpenAI
CEO Sam Altman spoke of a potential bubble and a study from the
Massachusetts Institute of Technology showed AI tools boosted
individual productivity, not corporate earnings.
Nvidia ( NVDA ) climbed 0.2% ahead of results, which are
expected after markets close, while the broader tech sector
inched up 0.3%. Options traders are pricing in about a
$260-billion swing in the company's market value after the
results.
"Nvidia's ( NVDA ) strong results will be like Xanax to the market
that was concerned over (OpenAI's Sam) Altman's comments," said
Eric Schiffer, chief executive officer of the Patriarch
Organization, who expects an upbeat report.
The impact of the Sino-U.S. trade war on the company's
significant China business earlier this year will be closely
watched, along with the effect on forecasts from its recent
revenue-sharing deal with the U.S. government.
"The China story remains uncertain: Beijing is now
pressuring domestic firms to buy local chips, which could erode
Nvidia's ( NVDA ) Chinese revenue share," said Ipek Ozkardeskaya, a
senior analyst at Swissquote Bank.
At 11:50 a.m. ET, the Dow Jones Industrial Average
rose 107.21 points, or 0.24%, to 45,525.28, the S&P 500
gained 14.32 points, or 0.22%, to 6,480.26, and the Nasdaq
Composite was up 45.44 points, or 0.21%, to 21,589.71.
Microsoft ( MSFT ) and Meta, Nvidia's ( NVDA ) top
customers, as well as semiconductor stocks Broadcom ( AVGO ) and
Advanced Micro Devices ( AMD ), struggled for direction.
Energy led gains among the 11 S&P 500 sectors
with a 0.7% rise. The Russell 2000 small-caps index
climbed 0.5% and has gained more than 4% since Federal Reserve
Chair Jerome Powell's dovish comments last week.
Markets were also stabilizing following Tuesday's initial
decline, after U.S. President Donald Trump attempted to fire Fed
Governor Lisa Cook.
The move is likely to face legal challenges. If successful,
it could allow Trump to nominate a dovish-leaning official to
the central bank's board, posing a challenge to the independence
of the Fed.
Investors are pricing in a 25-basis-point interest-rate cut
in September, according to data compiled by LSEG, with most big
brokerages also leaning in that direction.
New York Fed President John Williams said there was a need
to stay data-dependent before deciding on a move in September,
according to a report.
In stocks, MongoDB ( MDB ) jumped 34.3% after the
software-maker raised its annual profit forecast.
J.M. Smucker fell 5.1% after the Jif peanut butter
maker missed first-quarter profit estimates.
Advancing issues outnumbered decliners by a 1.33-to-1 ratio
on the NYSE and by a 1.29-to-1 ratio on the Nasdaq.
The S&P 500 posted 25 new 52-week highs and one new low,
while the Nasdaq Composite recorded 106 new highs and 22 new
lows.