San Francisco Frontiers - Nvidia boosts tech stocks but caution dominates ahead of Fed speech

Inflation and rising government bond yields worldwide have tempered the euphoria surrounding the artificial intelligence boom in recent sessions, with attention now turning to Fed chief Kevin Warsh's address at a key central bankers' conference in Jackson Hole, Wyoming, on Friday.

On Wall Street, the tech-heavy Nasdaq charged higher while European indices were mostly lower, tracking a mixed performance in Asia.

In its highly anticipated report, Nvidia -- the world's biggest company by market value -- shattered analyst forecasts by unveiling revenues that more than doubled in the second quarter from the year earlier, to a whopping $96 billion.

It forecast another blowout in the current quarter, and shares in Nvidia, considered the bellwether for the AI spending frenzy, were up more than seven percent in midday trading.

"Some investors had begun to question whether the AI trade was running out of steam, but for now at least Nvidia's results have offered some welcome reassurance," said Fawad Razaqzada, market analyst at FOREX.com.

Asian chip firms benefited, with South Korea's SK hynix and Samsung up 2.5 and 1.7 percent respectively, while Japan's Kioxia rallied five percent.

Yet despite the rally in tech stocks over the past year, many investors remain worried about when the vast sums of cash being pumped into the AI sector will lead to meaningful returns.

Dan Coatsworth, head of markets at AJ Bell, noted that the euphoria over Nvidia's results "failed to spread across the rest of the market".

The mood was dampened by data showing that the Federal Reserve's preferred gauge of US inflation remained stuck at a three-year high of 3.7 percent in July.

"While July core PCE inflation came in line with consensus... the details of the release were more inflationary," said Jim Reid, head of research at Deutsche Bank.

That raises the possibility of a Federal Reserve interest rate hike to get inflation back to its target of two percent -- which could also weigh on economic growth.

Investors are now focussed on Warsh's speech at the annual Jackson Hole symposium on Friday, hoping for clues about his plans for interest rates.

Oil prices rebounded after declines over several sessions as investors await developments on diplomatic efforts to reopen the Strait of Hormuz to tanker and cargo traffic.

US officials have vowed further economic pressure to make Iran open the strait to tanker traffic after six months of war, which has sent energy prices soaring.

However, "Shipping data continues to show traffic through the Strait running at a fraction of pre-war levels," said David Morrison, senior market analyst at Trade Nation.

On the corporate front, French drinks heavyweight Pernod Ricard saw its stock drop 4.4 percent after posting a 26 percent slump in annual profits, the result of ongoing weakness in the United States and China.

- Key figures at around 1550 GMT -

New York - DOW: UP 0.3 percent at 53,61.34 points

New York - S&P 500: UP 0.5 percent at 7,713.67

New York - Nasdaq: UP 1.0 percent at 26,401.45

London - FTSE 100: DOWN 0.8 percent at 10,492.54 (close)

Paris - CAC 40: DOWN 1.7 percent at 8,319.87 (close)

Frankfurt - DAX: UP 0.3 percent at 26,367.24 (close)

Tokyo - Nikkei 225: DOWN 0.2 percent at 66,131.98 (close)

Hong Kong - Hang Seng Index: DOWN 0.3 percent at 25,565.74 (close)

Shanghai - Composite: UP 1.1 percent at 3,956.57 (close)

Euro/dollar: FLAT at $1.1651 from Wednesday

Pound/dollar: DOWN at $1.3589 from $1.3591

Euro/pound: FLAT at 85.73 pence

Dollar/yen: DOWN at 159.27 yen from 159.37 yen

Brent North Sea Crude: UP 0.5 percent at $87.36 per barrel

West Texas Intermediate: UP 0.2 percent at $82.37 per barrel

W.Thompson--SFF