Investors holding their breath for a rate cut may soon get their wish.
Fed Chair Jerome Powell's highly anticipated speech at Jackson Hole this morning has sent stocks flying. Bulls who were hoping Powell would finally come around to the view of cutting interest rates in September were fed a hint.
While Powell noted that inflation and tariffs remain concerns, “the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.” The Dow Jones Industrial Average (^DJI) rallied more than 700 points to reach a new intraday record.
Here's what's top of mind for the Opening Bid team.
Nvidia (NVDA) bulls are stampeding over themselves heading into the chip darling’s Aug. 27 earnings report.
At least nine analysts have hiked their Nvidia price targets this week. The average Street price target on Nvidia now stands at $191, according to Yahoo Finance data, about 10% above current share price.
The Street is looking for big things from Nvidia’s earnings report. Most important is the general expectation that AI demand is accelerating.
Analysts even expect news around Nvidia’s China business to be bullish for the stock. CEO Jensen Huang fueled that narrative today during an overseas trip, teasing that the company is in talks with the US government on shipping a new, more advanced chip to China.
But there is one worry about Nvidia, brought up by Evercore ISI analyst Mark Lipacis. Investors are concerned that Nvidia, at an 8% weighting of the S&P 500, can’t capture a higher weighting because there is no precedent, Lipacis wrote.
He was quick to push back, however.
“Since Nvidia is offering a vertically integrated chip + software + hardware + networking ecosystem, we show that the PC+Networking ecosystem of Intel+Microsoft+Dell+Cisco captured 14% weighting at their peak, and we think that this is the precedent to benchmark Nvidia against,” Lipacis wrote.
One other thing that may not be a worry: Nvidia's valuation.
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It has been an unsavory week for the management team at Cracker Barrel (CBRL) and its investor base — which includes BlackRock, GMT Capital, and Vanguard, per Yahoo Finance data. At one point on Thursday, Cracker Barrel had lost $200 million in market cap, following CEO Julie Masino’s decision to change the company’s iconic logo. Its total market cap now stands at $1.22 billion.
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What Powell says on the economy from Jackson Hole is naturally important. So are any clues he drops on the direction of interest rates. But amid the inevitable flurry of headlines, don't forget something: While interest rate policy matters a great deal in investing, it’s not the be-all and end-all. A good investment will prove to be a good investment because of the underlying asset’s health. So go out Saturday morning, grab that $8 cold brew, and read a few corporate balance sheets. And hey, send me a pic on X @BrianSozzi of the balance sheet you are reading!
