Closing Bell: U.S. Markets Drifted Ahead of Nvidia Earnings, which Beat Expectations

U.S. stocks traded in a narrow band as investors awaited aftermarket earnings from semiconductor giant and technology bellwether Nvidia (NVDA), which reported results that beat Wall Street expectations yet again.

Also impacting trader sentiment: U. S. inflation data for July was hotter than expected and GDP growth cooled. The S&P 500 (SPX) was down a fractional 0.02% and the Dow Jones Industrial Average ($DJI) fell 0.21%. The Nasdaq-100 (NDX) rose 0.05%, while the small-cap Russell 2000 (RUT) fell 0.14%. U.S. benchmark oil futures (/CL) were down 0.53% to $81.90 per barrel.

Here's more on Nvidia earnings followed by highlights from the day's market and economic news:

Nvidia shares were down roughly 1% in post-market trading after it reported second quarter adjusted earnings per share of $2.22, on revenue of $96.22 billion. The stock's muted reaction came despite results that were well ahead of analyst expectations calling for adjusted EPS of $2.09 per share, on revenue of $91.85 billion, according to Zachs. Adjusted gross margin came in at 75%.

With a focus on the state of the AI trade, Nvidia's well-watched Data Center revenue came in at $89 billion, which is 117% above the year-ago period, and well above the $85.86 billion analyst estimate. Investors also are watching how the company intends to put cash to work, with second quarter free cash flow coming in at $21.34 billion.

Jensen Huang, founder and CEO of Nvidia, said: "AI has reached its inflection point. It's doing useful work. Its tokens are productive and profitable. Now, compute is revenue. And demand is accelerating. This time last year, one lab alone was driving the buildout; today, we have a golden age of new AI labs and startups, multiple frontier labs scaling in parallel, a thriving open-model ecosystem and physical AI coming online - with strong momentum across the U.S. and around the world. The AI infrastructure buildout is at full steam. Vera Rubin, now in full production, was built to power exactly this moment."

• For interviews on Nvidia, watch Schwab Network Tech coverage including:
• NVDA Baking 'Six-Layer Cake' Through Data Centers, AI Chips & Financing
• NVDA Needs More Than "Astronomical" Earnings in Building "AI Economy"

Anthropic plans to spend $45 billion to rent AI cloud computing power from Nscale's West Virginia data center, according to a Reuters report citing an anonymous source. Nscale, a cloud infrastructure provider, will deploy Nvidia's new Vera Rubin chips to support Anthropic computing needs including its AI coding tool, Claude Code, the person said. 

The big S&P 500 Movers: Moderna (MRNA) was down 6%, making it the biggest SPX decliner. SalesForce (CRM) was up more than 11%, as was CrowdStrike Holdings (CRM), making them the biggest SPX advancers.

Meta Platforms (META), which operates Facebook and Instagram, agreed to a landmark settlement with 47 states over claims of social media addiction. Meta agreed to pay $16.7 billion. The state of California could receive $1.5 billion to $2.1 billion if the court officially approves the settlement, according to the California Attorney General and news reports. As part of the settlement, Meta agreed to establish daily limits and blocks on nighttime use for teen users, as well as enhanced age restrictions to protect children, according to reports. Meta shares rose 1% Wednesday.

Fed in Focus as Inflation Persists, GDP Slides: The U.S. Personal Consumption Expenditures (PCE) price index rose 0.2% in July and increased 3.7% from one year ago, according to the Bureau of Economic Analysis. Core PCE (excluding food and energy) came in line at 0.2% for the month and 3.3% year-over-year. Personal Income increased by 0.4% ($115.1 billion) in July. Consumer Spending increased by 0.2% ($36.3 billion), driven by higher spending on services, which offset a drop in goods. Second-quarter GDP growth came in at an annualized 1.5%, down from 2.1% in the first quarter, according to reports.

For more on this week's earnings and economic calendars, see Week Ahead: Jackson Hole Puts Fed in Focus, Nvidia (NVDA) Earnings

Tom White contributed to this article

This material is intended for informational purposes only and should not be considered a personalized recommendation or investment advice. Investors should review investment strategies for their own particular situations before making any decisions.

Schwab Network is brought to you by Charles Schwab Media Productions Company (“CSMPC”). CSMPC is a subsidiary of The Charles Schwab Corporation and is not a financial advisor, registered investment advisor, broker-dealer, futures commission merchant or forex dealer member.

Charles Schwab Media Productions Company and all third parties mentioned are separate and unaffiliated, and are not responsible for one another's policies, services or opinions.

Data contained herein is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. All events and times listed are subject to change without notice.