Wall Street closed the week cautiously as stocks fell, markets dropped, and investors waited for new inflation figures.
The headlines were dominated by political and corporate drama, from Trump’s attempt to remove a Fed Governor and the court’s ruling on his tariffs to Nvidia’s record earnings and Elon Musk’s most recent clash with regulators.
This week’s top stories have captured the attention of many.
Investors play it safe as they drag out the tech
Wall Street has had an unpredictable week with mixed signals. All the main indexes fell: Dow Jones dropped 92 points; S&P 500 was down 0.6% and Nasdaq 1.2%.
Investors were on the defensive as they waited for new inflation figures. The biggest losers in this sector included Nvidia and Super Micro Computer.
Investors seem to have preferred safer investments over big technology.
The consumer staples sector and the value stock segment performed better. This is a sign that the mood on the market has become more cautious as it heads towards September.
Some interesting moves were made by individuals as well. Keurig Dr Pepper suffered a major loss after an announcement of acquisition. Deckers Outdoor, on the other hand, had a great week due to new product launches.
Investors tried to weigh the positive news of Fed chair Jerome Powell’s dovish remarks against the mixed results for regional banks and chipmakers.
Trump and the Fed
This week, the Fed-White House battle reached a new level when US President Donald Trump removed Federal Reserve Governor Lisa Cook citing mortgage fraud allegations as the cause for her removal.
It was the first attempt by a president to remove the Federal Reserve Governor in its 112-year-old history.
Cook accused Trump of misleading Cook about mortgage agreements. Trump said he has constitutional authority to do so.
Cook denied these allegations and responded to Trump. Cook filed a suit to stop her firing, arguing that Trump did not have legal authority to do so.
In the lawsuit, it is alleged that her dismissal violates federal laws, which require “cause”, a standard usually interpreted to be serious misconduct.
This case could threaten the long-standing independence of Federal Reserve and reach to Supreme Court. It would be a potential revisiting of a 1935 historic decision that protected independent agencies.
Trump’s action is viewed as an effort to gain control of the central bank and intensify political tensions.
White House officials defended Cook’s dismissal, but economists and government officials warned that this interference could threaten economic stability. Cook is still on the board of directors pending any court proceedings. Click here to read the full report
AI Demand is the driving force behind Nvidia’s Record Quarter
Nvidia’s second quarter was a great success, exceeding expectations by $46.7 billion. This is a massive jump of 56% compared to the same time last year, and up 6% from last quarter.
Earnings per share (EPS), which is the company’s measure of earnings, also exceeded expectations at $1.04 and beat $1.01
Data centers are the real stars of this story, with a 56% increase. Nvidia is currently thriving on this business, due to the high demand for AI infrastructure.
The gross margin of the company remained strong, at 72.4%. The CEO Jensen Huang cited the rapid adoption rate of the Blackwell AI platform by the company as the key factor behind the AI boom.
Even though the news was good, analysts expected even higher revenue from data centers, which led to a small drop in stock prices after-hours.
Nvidia has a positive outlook for the future, predicting revenue of $54 billion during the third quarter.
This does not include any potential H20 chip shipments to China. The situation is complicated by the ongoing regulatory framework. Click here to read the full report
SEC charges Musk with late tweet disclosure
Elon Musk has retaliated against the SEC in another Musk vs US Administration saga.
His legal team has filed a motion on Thursday to dismiss the lawsuit brought by the US Securities and Exchange Commission. The suit claims that he failed to report his Twitter stake as early as 2022.
Musk is accused by the SEC of waiting 11 days longer to disclose his initial ownership. This allowed him to buy more shares for a cheaper price, and make $150 million.
Musk’s attorneys claim that the delay in releasing the video was a simple mistake, and it was quickly fixed.
The SEC insists that there was never any intent to harm or mislead investors. In his filing, he accuses the SEC for overstepping their authority, unfairly targeting and calling the case a waste.
Musk wants the court to dismiss the entire case.
The Court limits Trump’s tariff power
A US court of appeals ruled on Friday that the majority of President Donald Trump’s tariffs were illegal.
The court ruled 7-4 that Trump had overstepped his powers under an emergency law intended to give him economic power. They argued the Congress has the authority to set tariffs, and not Trump.
This ruling overturns the “reciprocal tariffs” he placed on many other countries. These included a blanket 10% tariff for nearly all U.S. Trading Partners.
The tariffs will not disappear instantly, even though the decision is an important setback.
The Supreme Court has granted the Trump Administration until 14 October to file an appeal.
Trump says that he will appeal the ruling and expects to win at the Supreme Court. Click here to read the full article
The post Weekly Wrap: Markets wobble, Trump battles Fed Nvidia smashes record, Musk faces SEC may be updated as new developments unfold.
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