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U.S. stocks steady; Cook’s dismissal, Nvidia earnings in spotlight


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U.S. stocks steadied Tuesday as investors digested President Donald Trump’s abrupt removal of Federal Reserve Governor Lisa Cook ahead of key Nvidia earnings.

At 09:35 ET (13:35 GMT), the Dow Jones Industrial Average fell 27 points, or 0.1%, while the S&P 500 index climbed 2 points, or 0.1%, and the NASDAQ Composite gained 15 points, or 0.1%.


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Fed independence fears weighs 

Trump released a letter on social media announcing Cook’s removal late Monday, effective immediately.


Trump said the firing was tied to allegations of mortgage fraud, and that there was “sufficient cause” for her removal. The allegations were raised earlier in August by Federal Housing Finance Agency Director William Pulte. 


Cook denied the allegations, and had stated that she would not be bullied out of her position.


But Trump’s announcement of her removal marks his latest attack against the Fed, with the president seen repeatedly attempting to exert more influence over the central bank. Cook is a member of the Fed’s seven-member rate-setting board. 


Trump’s moves sparked heightened uncertainty over the Fed’s independence, with political interference in the central bank threatening to undermine U.S. economic credibility. The Fed has traditionally operated outside the government’s sphere of influence. 


Trump had earlier this year also attempted to remove Fed Chair Jerome Powell, who had largely rejected the president’s calls to cut rates immediately. 


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Consumer confidence due


The chance of the Federal Reserve cutting interest rates at its next meeting in September received a boost at the end of last week following a speech by Powell at Jackson Hole.

New orders for key U.S.-manufactured capital goods increased more than expected in July, suggesting business spending on equipment got off to a strong start in the third quarter.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, surged 1.1% last month after a revised 0.6% decline in June, the Commerce Department’s Census Bureau said on Tuesday.


However, orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, fell 2.8%, pulled down by fewer commercial aircraft bookings. Durable goods orders decreased 9.4% in June. 


Later in the session, investors will also digest the latest consumer confidence data, while the Case-Shiller Home Price Index and the Richmond Fed Manufacturing Index are also due later.


Richmond Federal Reserve President Thomas Barkin is also set to speak.

On Thursday, the second estimate of second-quarter GDP and the latest weekly jobless claims are also due.


HSBC economists expect second-quarter GDP growth to be revised to an annualized 3.2% from the initial 3.0% estimate. In a recent note, they said that consumer sentiment will “remain subdued” in August, while July durable goods orders are likely to show a contraction.


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Nvidia’s earnings loom large


Investors also turned largely cautious before closely-watched earnings from artificial intelligence major Nvidia (NASDAQ:NVDA), due on Wednesday. The company is regarded as a bellwether for AI and tech. 


Nvidia’s earnings come amid growing doubts over the long-term prospects of AI– doubts which caused a sharp selldown in tech stocks last week. 

Its results arrive as the second-quarter earnings season winds down, with S&P 500 profits tracking a 12.9% gain from a year earlier—well above the 5.8% rise expected at the start of July, according to LSEG IBES.


Nvidia is projected to report a 48% jump in per-share earnings on revenue of $45.9 billion for its fiscal second quarter, LSEG data show.


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Crude slips lower


Oil prices fell, handing back some of the previous session’s outsided gains as traders closely monitored developments in the Russia-Ukraine conflict for potential disruptions to regional fuel supplies.

At 09:35 ET, Brent futures dropped 1.4% to $67.24 a barrel, and U.S. West Texas Intermediate crude futures fell 1.6% to $63.77 a barrel.

Both contracts rose to their highest in more than two weeks on Monday, gaining almost 2% as Ukraine struck Russian energy infrastructure, and with traders anticipating more U.S. sanctions on Russian oil.

Gold prices rose as safe haven demand was buoyed by increased concerns over Federal Reserve independence after Trump said he was firing Governor Lisa Cook. 

Spot gold rose 0.2% to $3,373.14 an ounce, after earlier climbing to two-week highs, while gold futures for October rose 0.1% to $3,419.35/oz. 

The Cook firing is Trump’s latest attack on the Fed, and comes as the president seeks to gain more influence over the Fed’s rate-setting activities. 





 
 
 

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