Dow Dips, Nasdaq Inches Up as Nvidia Earnings Take Center Stage | Daily Market Analysis

Key events:

• USA - Fed Waller Speaks
• Eurozone - Eurogroup Meetings
• UK - BoE MPC Member Mann Speaks
• USA - Crude Oil Inventories

US stocks showed mixed performance on Tuesday, as investors remained cautious ahead of Nvidia's earnings report due on Wednesday.

The Dow Jones Industrial Average had dropped 67 points, or 0.2%, while the S&P 500 inched up by 0.1%, and the NASDAQ Composite gained 0.1%.

NVIDIA Corporation is set to release its quarterly earnings report on Wednesday after the market close, which investors are eyeing as a potential indicator of whether the AI-driven tech rally will continue or lose momentum.

Ahead of the report, Truist Securities noted that Nvidia's "business trends are continuing to improve," based on regular conversations with component buyers and sellers.

In other tech news, Apple shares saw a slight increase after recovering from losses triggered by Monday's announcement that CFO Luca Maestri will step down in early 2025.

Investors are also looking forward to Apple's upcoming product event on September 9, with some tech enthusiasts anticipating that the release of the new iPhone could trigger a significant upgrade cycle.

Meanwhile, Netflix Inc. climbed more than 2%, as Evercore ISI raised its price target on the stock to $750 from $710 per share, citing strong survey data.

Gold prices climbed above $2,500 per troy ounce on Wednesday, fueled by growing geopolitical tensions in the Middle East. Additionally, support came from Federal Reserve Chair Jerome Powell's recent remarks at the Jackson Hole symposium, where he hinted that it might be time to start reducing interest rates, making gold more attractive as it lowers the opportunity cost of holding non-yielding assets.

Investors are now awaiting further guidance from Fed officials Christopher Waller and Raphael Bostic, whose speeches on Wednesday may provide more insights into the direction of US interest rates. The focus will then shift to the upcoming US Gross Domestic Product (GDP) Annualized data for the second quarter and the Personal Consumption Expenditures (PCE) Price Index, set to be released on Thursday and Friday, respectively. Stronger-than-expected results could bolster the US Dollar and limit gains for the USD-denominated gold price.

In the currency markets, the AUD/USD pair is retreating towards the 0.6800 level during Wednesday’s Asian session, after touching a seven-month high of 0.6813. The pair found renewed support following the release of Australia's monthly Consumer Price Index (CPI) data, which showed inflation slowing at a less-than-expected pace in July, rising 3.5% year-over-year compared to the 3.4% forecast and June's 3.8% increase.

The hotter-than-expected inflation data has rekindled expectations of additional interest rate hikes from the Reserve Bank of Australia, boosting the Australian Dollar. However, a cautious market mood capped further gains for the risk-sensitive Aussie while increasing demand for the safe-haven USD. Moving forward, the AUD/USD pair will be influenced by broader market sentiment and Fed-driven USD movements, with Thursday's Australian Private Capex data for Q2 also in focus.

Meanwhile, the Japanese Yen remains under pressure against the US Dollar early Wednesday. The USD/JPY pair is holding onto its recovery gains, supported by cautious comments from Bank of Japan  Deputy Governor Ryozo Himino, who noted that the BoJ would adjust its monetary policy if it becomes more confident in its economic outlook.

However, the differing policy approaches between the BoJ and the Federal Reserve could limit further gains for the USD/JPY pair. The downside for the JPY may be contained by the hawkish sentiment around the BoJ, which is expected to continue raising interest rates. In contrast, Fed Chair Jerome Powell signaled at Jackson Hole that policy adjustments might be on the horizon, though he did not specify the timing or extent of potential rate cuts.

In the cryptocurrency market, over $313 million in positions were liquidated on Tuesday as Bitcoin dropped below $60,000, according to Coinglass data. Long traders accounted for 90% of the liquidations, totaling $282 million, while short liquidations were valued at $31.36 million.

Ethereum led the liquidation tally with over $100 million, of which $93.52 million were long positions. Ethereum's price has fallen nearly 9% over the past 24 hours. Bitcoin followed with $94 million in liquidations, including $85.97 million in long positions and $8.87 million in short positions. Notably, Bitcoin's open interest (OI) dropped by more than $2.4 billion in recent hours, indicating increased liquidations or trader caution amid declining prices.

The NZD/USD pair is trading weaker near 0.6245 after retreating from eight-month highs in early Asian trading on Wednesday. However, the pair's downside may be limited due to the weaker US Dollar following the Fed's signal of a potential rate cut later this year.

After the Reserve Bank of New Zealand's unexpected rate cut in August, speculation has grown that the central bank may accelerate future cuts if economic data suggests increasing downside risks to growth and inflation. Traders now anticipate the RBNZ will lower rates by 25 basis points in both October and November, which could weigh on the New Zealand Dollar and cap gains for the NZD/USD pair.