Stocks up ahead of Nvidia earnings

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Another Dow record
Stocks edged higher ahead of Nvidia’s earnings report. The Dow Jones Industrial Average eked out a 0.02% increase, marking its second consecutive record close. The S&P 500 and Nasdaq Composite both rose 0.16%. Nvidia shares climbed 1.5% as investors look to the chip giant’s earnings release expected Wednesday. Meanwhile, the yield on the 10-year Treasury rose slightly, while U.S. oil prices fell 2.2% on the hope Libya’s production halt would be temporary.

‘Most important stock’
Nvidia has been volatile of late. The AI chipmaker’s market cap has increased ninefold since 2022 and briefly became the world’s most valuable public company. But soon after the stock dropped nearly 30% over seven weeks, losing $800 billion in value. The stock has since rebounded to within 7% of its all-time high. With quarterly results due Wednesday, Wall Street is focused on Nvidia’s performance, as it could impact the broader market. “It’s the most important stock in the world right now,” EMJ Capital’s Eric Jackson told CNBC. “If they lay an egg, it would be a major problem for the whole market. I think they’re going to surprise to the upside.” CNBC’s Kif Leswing takes a look at what to expect from Nvidia’s earnings.

Cut-price weight loss
Eli Lilly introduced a new, lower-priced version of its weight loss drug Zepbound, aimed at patients without insurance coverage, including those on Medicare. The 2.5-milligram and 5-milligram single-dose vials are priced at $399 and $549 per month respectively, about half the usual list price. Eli Lilly hopes to expand access, increase supply and ensure patients obtain genuine treatments amid rising demand and copycat versions. The initiative addresses affordability concerns for popular GLP-1 weight loss medications, which typically cost around $1,000 monthly before insurance.

Censored
Mark Zuckerberg, CEO of Meta, claims the Biden administration pressured the company to censor Covid-19 content on Facebook in 2021. In a letter to the House Judiciary Committee, Zuckerberg stated: “In 2021, senior officials from the Biden Administration, including the White House, repeatedly pressured our teams for months to censor certain COVID-19 content, including humor and satire, and expressed a lot of frustration with our teams when we didn’t agree.” Zuckerberg expressed regret over some decisions made in response to government requests. 

Nordstrom soars 
Nordstrom shares surged more than 7% in extended trading after the retailer posted earnings that exceeded Wall Street expectations. The retailer reported adjusted earnings of 96 cents per share, above analysts’ estimates, on revenue of $3.89 billion, up 3.4% from a year ago. Despite the earnings beat, Nordstrom provided cautious full-year guidance, expecting adjusted EPS between $1.75 and $2.05 and sales ranging from a 1% decline to 1% growth.

[PRO] Dividend stocks to pop
As anticipation builds for a Federal Reserve interest rate cut in September, dividend-paying stocks are poised to gain investor attention. Here’s how to select promising dividend stocks.

While the S&P 500 is within touching distance of its record high, the PHLX Semiconductor index remains more than 14% below its all-time high, with many of its components in bear market territory. As CNBC’s Fred Imbert writes, that has many investors questioning the sustainability of the recent rally. 

Nvidia has been a key driver of the market’s rally this year, with its stock up 160%, despite a recent dip. As the second most valuable U.S. stock, investors are eagerly awaiting its earnings report to see if it can sustain the AI momentum. However, with the stock trading at 37 times its forward earnings — above the S&P 500 tech average — there are concerns about whether Nvidia can meet high expectations, especially regarding future guidance.

“Go back to the middle part of the year, the S&P was up 15%, five percentage points of that gain was Nvidia alone,” Scott Chronert, Citi’s U.S. equity strategist, told CNBC. “There’s no question from a basic index weighting perspective the importance of Nvidia.” However, the market needs to continue to see evidence of AI productivity-enhancing tailwinds playing out, Chronert said, highlighting that future guidance will be crucial.

Joseph Moore, a semiconductor industry analyst at Morgan Stanley, acknowledges that while competitors like AMD, Broadcom and Marvell present viable alternatives, Nvidia’s execution remains strong. “We expect them to at least hold share in 2025… These numbers have gotten so big so quickly, I think that’s the bigger risk,” Moore told CNBC. He sees Nvidia retaining its market share of 90% of AI processors.

Going into the earnings, Truist Securities analyst William Stein raised his price target for Nvidia, CNBC’s Pia Singh explains why. And CNBC’s Kif Leswing takes a look at what to expect from its earnings.

The broader tech landscape is also under scrutiny this week, with earnings from Dell and Salesforce adding to the mix. August saw a tech sector sell-off, but Federal Reserve Chair Jerome Powell’s dovish comments helped reverse some of that downturn. 

However, Nomura analyst Naka Matsuzawa warns that stronger-than-expected tech earnings could challenge the current market pricing of rate cuts.

“This week U.S. tech companies’ earnings reports will be the main focus, and if the risk of a collapse in tech stocks subsides, this pricing-in of rate cuts could be partially reversed,” he wrote in a Monday note.

— CNBC’s Lisa Kailai Han, Brian Evans, Fred Imbert, Arjun Kharpal, Kif Leswing, Annika Kim Constantino, Gabrielle Fonrouge, Pia Singh and Spencer Kimball contributed to this report.