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Jerome Powell, chairman of the U.S. Federal Reserve, right, walks the grounds at the Jackson Hole economic symposium in Moran, Wyoming, US, on Thursday, Aug. 24, 2023.

David Paul Morris | Bloomberg | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Rally fizzles out
U.S. stocks closed lower Thursday as an earlier Nvidia-sparked rally fizzled out, while Treasury yields climbed higher. The pan-European Stoxx 600 tumbled 0.4%, ending three consecutive days of gains. Separately, Turkey hiked interest rates from 17.5% to 25%, more than the expected 20%. The lira jumped on the news.

Muted response to Nvidia
Nvidia shares inched up just 0.1% Thursday, paring earlier gains of as much as 8% when it touched a record high of $502. That’s despite the company reporting an astounding earnings beat after the bell Wednesday. Nvidia’s results scared investors away from competitors as well: Shares of AMD slumped 7%, while that of Intel sank 4.1%.

Dog days of August
August is living up to its reputation as a horrid month for stocks. The S&P 500 is down more than 3% so far, on pace to snap a five-month winning streak, while the Nasdaq Composite is headed for its biggest one-month loss since December. Low trading volumes, economic weakness in China and high Treasury yields are all contributing to the August sell-off, writes CNBC’s Fred Imbert.

Building BRICS
The BRICS coalition — which comprises Brazil, Russia, India, China and South Africa — extended invitations to six nations. Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates will join BRICS on Jan. 1, 2024. A total of 23 countries, including the six set to join the coalition, have formally applied for membership.

[PRO] A single-stock ETF play
Exchange-traded funds typically track a basket of stocks belonging to a specific sector, like banks or semiconductors. This ETF, however, consists of just one stock — and aims to deliver a 1.5-times return on a daily basis. What’s more, it’s had a return of more than 400% year to date.

The bottom line

Even Nvidia’s blockbuster earnings couldn’t quell investor anxiety over Jackson Hole.

Nvidia shares rose just 0.1% despite reporting a 422% year-over-year surge in net income. Perhaps investors, bursting with enthusiasm over the chipmaker, had already priced in the record revenue. Perhaps investors wanted to cash out early after Nvidia’s shares hit a record high earlier in the day — investors have been bracing for a bad August, and an even worse September, which is historically the worst month for stocks. Or perhaps investors were worried about Federal Reserve Chair Jerome Powell’s speech at Jackson Hole.

(To be clear, analysts still think Nvidia’s shares will pop in the long run. Rosenblatt increased its price target from $800 to $1,100, a new high among Wall Street analysts and an implied 133% upside from Thursday’s close. Big Wall Street banks like Goldman Sachs, Citi and Bank of America were more conservative than that, but still hiked their targets for Nvidia.)

Last year, the S&P 500 lost 2% in the five trading days before Powell’s Jackson Hole speech, and stumbled 5.5% in the five after, according to DataTrek Research. This time, investors are “worried about what [Powell] might say around r-star and embracing, high new normal rates,” said Krishna Guha, head of global policy and central bank strategy for Evercore ISI. R-star is the value at which interest rates neither stimulate nor restrict the economy. In other words, investors are concerned the Fed might not cut interest rates that much even after inflation subsides.

History, then, repeated itself. One day before Powell’s speech, stocks fell sharply. The S&P retreated 1.5% and the Nasdaq shed 1.87%, the biggest one-day loss since Aug. 2 for both indexes. The Dow Jones Industrial Average slipped 1.08%, its worst day since March. Technology stocks, because of their sensitivity to interest rates, were the biggest losers of the day: Amazon lost 2.7% and Apple dropped 2.6%. With just one week left before August draws to a close, it seems market sentiment isn’t likely to change soon, even with earth-shattering reports like Nvidia’s.

CNBC’s Jeff Cox contributed to this report

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