Nasdaq Wrap: It's risk-on after Powell signals 'time has come'; Nvidia set to test AI hype this week - Stockhead (2024)

• Stocks climbed after Fed Chair Powell signalled rate cuts
• Peloton, PayPal, and Netflix all saw gains, with Netflix reaching a new all-time high
• Nvidia’s earnings report this week is being called the most crucial of 2024

Nasdaq Wrap is our new weekly look at the highly influential, tech-heavy Nasdaq 100 index – movers and shakers over the past seven days or so, talking points and a brief look at what’s in store this week.

The week that was

US stocks closed on a high note on Friday after Federal Reserve Chair Jerome Powell confirmed that the central bank will soon implement long-anticipated interest rate cuts.

Both the S&P 500 and Dow Jones finished the week within a whisker of their all-time highs, while the Nasdaq was 1.4% higher.

Markets had spent most of the week treading water waiting for Powell’s speech at the Jackson Hole Economic Symposium in Wyoming.

In the event’s closing remarks, Powell declared that “the time has come” for rates to come down, although he didn’t specify exactly when or by how much.

“The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks,” Powell said.

He also made it clear that the primary focus for the Fed has now shifted to safeguarding the US job market, rather than just on inflation.

“We will do everything we can to support a strong labour market as we make further progress towards price stability,” Powell continued.

The market is now pricing in 100bps of rate cuts by year-end, potentially equivalent to a 50bps cut in September, and a 25bps cut in both November, and December.

Winners that emerged immediately after Powell’s comments include housing stocks like homebuilders and building materials suppliers.

Investors also bid up major cruise liners such as Norwegian Cruise Line Holdings and Carnival Cruise Line. The reason? Lower interest rates will reduce their costs for loans used to buy ships and fund activities.

“It should be risk-on,” said Chamath De Silva at Betashares.

“Powell has confirmed that we’ll shortly be entering an easing cycle and that the fight against inflation is done, so I expect a bit of an everything rally, stocks and bonds both performing well.”

Top Nasdaq 100 movers and stock highlights

Peloton Interactive (NASDAQ:PTON)

The fitness equipment maker was one of the best Nasdaq stocks last week, up by over 50%.

The stock price jumped after seeing its first quarterly revenue growth in over two years.

Peloton also reported a 2.3% rise in subscription revenue and achieved $15 million in cost savings as part of its restructuring plan.

Looking ahead, Peloton projects fiscal 2025 revenue between $2.4 billion and $2.5 billion, slightly below expectations.

The company is still searching for a new CEO following the recent departure of Barry McCarthy.

PayPal Inc (NASDAQ: PYPL)

PayPal hit a 52-week high last week , marking a 17% increase over the past year.

The surge reflects renewed investor confidence and the company’s successful adaptation to the evolving digital payments landscape.

PayPal’s recent Q2 report showed an 11% rise in total payment volume, and a 9% increase in revenue, with a 36% boost in earnings per share.

The Saudi Public Investment Fund has increased its stake in PayPal, but despite these positive news, PayPal plans to cut 2,500 jobs, or 9% of its workforce.

Analysts have mixed reviews, with some upgrading PayPal’s stock while others maintain a cautious stance.

Netflix (NASDAQ:NFLX)

Netflix also reached its new all-time high last week, surpassing its previous peak from November 2021.

The milestone came after Netflix said it has successfully cracked down on password sharing and launched a new ad-supported subscription tier, which has seen a 150% increase in upfront advertising commitments.

Netflix’s ad-supported plan is a cheaper option for viewers.

In Australia, this plan starts at $7.99 per month, and for $18.99 per month, you can get the service without ads.

The premium plan, priced at $25.99 per month, includes features like 4K resolution, HDR, and spatial audio for the best viewing experience.

Tesla Inc (NASDAQ:TSLA)

Tesla was up over 1% for the week, despite Morgan Stanley (MS) saying it was reducing its stake in the company.

MS cited a slowdown in the auto industry, fierce competition in electric vehicles, and declining consumer interest in EVs for its downgrade.

MS said it was reallocating funds to less volatile stocks with better earnings potential, such as Spotify.

In related news, the European Union has decided to lower tariffs on Tesla vehicles imported from China from 20.8% to 9%.

This change comes amid previous plans to impose higher tariffs on Chinese EVs due to concerns about unfair subsidies.

Things to watch for this week

Nvidia Corp’s (NASDAQ:NVDA) earnings release on Wednesday US time will be one of the highlights in a busy end of August.

Some analysts have called this the “single most important earnings report of 2024”.

Nvidia’s stock has skyrocketed 170% in the past year and 3,000% over the past five years. But there are now some concerns as Nvidia faces shipment delays for its new AI chip, Blackwell.

However, strong demand for its AI chips from companies such as Taiwan Semiconductor, AMD, and Meta suggests Nvidia’s sales should remain strong.

“For Nvidia’s upcoming report to be seen positively, the company needs to show that the Blackwell delays are not a major issue and that its data centre sales are growing,” said a note from JP Morgan.

On the data front, reports to watch out this week are the US GDP and PCE price index.

In the last quarterly reading in April, the US economy grew at its slowest rate in almost two years.

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