S&P 500, Nasdaq tumble as tech lags, Nvidia shares slide

VaselineAugust 26, 2024

0 7 minutes read

S&P 500, Nasdaq tumble as tech lags, Nvidia shares slide

U.S. stocks were mixed in choppy trading on Monday as investors weighed the imminent arrival of interest rate cuts and braced for a busy week dominated by Nvidia’s ( NVDA ) earnings report. AI chip shares fell along with other semiconductor names.

The Dow Jones Industrial Average (^DJI) hovered above the flat line after briefly hitting an intraday high. The S&P 500 (^GSPC) fell 0.3%, while the Nasdaq Composite (^IXIC) fell about 0.7%.

Technology lagged during the session, as shares of semiconductor giant Broadcom ( AVGO ) and electric vehicle maker Tesla ( TSLA ) both fell more than 3%.

Stocks are reeling from weekly gains after Chairman Jerome Powell made it clear the Fed is ready to pivot to cutting interest rates in September. The major indices all gained more than 1% last week.

Markets quickly priced in 1% cuts through the end of 2024. But with only three Fed meetings left in the year — in September, November and December — and the August jobs report still to come, Wall Street is ask when and if a 0.5% discount is likely.

Now, the focus is firmly on Nvidia’s earnings report – the highlight of the week – which will likely determine whether market sentiment remains upbeat. If the chipmaker’s results on Wednesday fail to meet skyrocketing expectations, that could further hurt AI trading, which fueled the stock’s gains, and in turn test the market’s recovery from August lows.

Also ahead is an update on Friday to Fed policymakers’ preferred inflation gauge, the PCE print, which is likely to feed into the rate calculations. Also on deck is a second-quarter GDP reading on Thursday.

Meanwhile, oil prices rose about 3 percent amid reports of production shutdowns in Libya and fears of escalating tensions in the Middle East after Israel and Hezbollah launched strikes. Global benchmark Brent crude futures (BZ=F) rose to $80.08 a barrel, while U.S. benchmark WTI crude futures (CL=F) changed hands at $77.19 a barrel barrel.

Live11 updates

Monday, August 26, 2024 at 21:21 GMT+2

History shows that aggressive Fed rate cuts may not be a good thing for stocks

Now that Fed Chairman Jerome Powell has opened the door to the start of a rate-cutting cycle, economists have thought how deeply the Fed cuts in 2024 will largely depend on how the labor market holds up.

If the August jobs report, due out on September 6, confirms that the weakness in the labor market in the July report may have been overstated, many economists say the Fed will start with a 25 basis point rate cut basic.

In other words, the Fed should not cut rates because of persistent signs that the economy is weakening. And for many strategists, that remains the key thing investors should focus on when thinking about Federal Reserve tapering.

If the Fed is tapering because the economy needs help, it hasn’t been good for stocks. Research from Truist Co-CIO Keith Lerner sent to clients Monday shows that the S&P 500 was at least 11% higher a year after the Fed’s first interest rate cut since 1989, as long as the economy remained on solid footing.

However, when the US economy went into recession over the next 12 months, the S&P 500 fell by at least 14% over the next year, according to Lerner’s research.

This provides a clear reading for the current environment. If the Fed is forced to taper more aggressively because of a significant downturn in the labor market, history says that’s not a welcome sign for the stock market.
Monday, August 26, 2024 at 20:47 GMT+2

Nvidia will report second-quarter earnings on Wednesday in a major test for the AI trade

Shares of Nvidia (NVDA) fell more than 2% on Monday as investors await the chip giant’s quarterly results set for Wednesday after the closing bell.

Yahoo Finance’s Dan Howley reports:

Nvidia’s earnings announcement – the most anticipated results of the quarter – will send ripple effects across the technology sector as investors look for signs that artificial intelligence trading will continue to dominate market conversations in the second half of the year.

Shares of Nvidia are up more than 163% year-to-date and 60% over the past six months. Rival AMD’s ( AMD ) share price is up 9% year-to-date and has fallen about 14% over the past six months.

Shares of Intel ( INTC ) have tumbled 57% since the start of the year and are down 53% over the past six months as the company continues to struggle amid its massive turnaround effort.

Read more here.
Monday, August 26, 2024 at 20:00 GMT+2

Investors are betting that Powell’s pivot will ease problems at regional banks

Yahoo Finance’s David Hollerith reports:

A pivot by Federal Reserve Chairman Jerome Powell has investors betting that US bank stocks are about to move higher as lower interest rates are expected to provide much-needed relief to beleaguered lenders.

That bet sent an index that tracks mid-sized regional banks ( ^KRX ) up 5% on Friday, the index’s biggest one-day advance in all of 2024. It held on to those gains on Monday.

The sizable move came after Powell sent a clear signal to markets, saying “the time has come to adjust policy,” instituting the Fed’s first rate cut in more than 4 years.

An index that tracks the broader banking sector (^BKX) is now up more than 18% for the year, in line with the performance of the S&P 500 (^GSPC).

Read more here.
Monday, August 26, 2024 at 19:30 GMT+2

Oil prices rise 3% on Middle East tensions, production in Libya halted

Oil prices rose sharply on Monday amid a shutdown in Libyan oil production and heightened tensions in the Middle East.

West Texas Intermediate (CL=F) rose as much as 3% to over $77 a barrel, while international benchmark Brent (BZ=F) rose more than 2% to it was trading above 80 dollars per barrel.

Over the weekend, Israel launched an airstrike against Tehran-backed Hezbollah’s missile launch sites in Lebanon, adding to fears of a wider conflict involving Iran in the region.

“Rising tensions could bring an Iranian military response that, if seen, could slow global oil moves,” Dennis Kissler, senior vice president at BOK Financial, wrote in a note to clients on Monday.

Read more here.
Monday, August 26, 2024 at 19:00 GMT+2

Gold rises amid geopolitical tensions, expected rate cut

Gold prices neared record highs on Monday as investors flocked to the precious metal amid heightened geopolitical tensions and expectations of a Fed rate cut in September.

Gold futures (GC=F) for December delivery climbed above $2,552 an ounce.

The precious metal is up more than 23% year to date, making it one of the best performing commodities of the year.
Monday, August 26, 2024 at 18:39 GMT+2

Tech stocks lag as Nvidia, Broadcom, Tesla slip

Tech stocks lagged on Monday, trailing the S&P 500 (^GSPC) and the Nasdaq Composite (^IXIC).

Shares of Nvidia ( NVDA ) were down more than 1.5% by 12:30 a.m. ET, though they were off session lows. Semiconductor Broadcom ( AVGO ) fell more than 3 percent, while electric vehicle maker Tesla ( TSLA ) also fell more than 2 percent.

Meanwhile, Materials (XLP), Utilities (XLU) and Energy (XLE) stocks gained, helping lift the Dow Jones Industrial Average (^DJI).

Technology lagged on Monday, while materials, utilities and energy stocks gained.
Monday, August 26, 2024 at 17:30 GMT+2

McLaren CEO tries to follow Ferrari’s blueprint for success, but without ‘arrogance’

Pras Subramanian of Yahoo Finance reports:

CARMEL, Calif. — McLaren CEO Michael Leiters believes the British luxury supercar maker can pull off the same feat as Ferrari, but in a slightly different way.

“We have one element in our brand and that’s ownership,” Leiters, who has been at the helm of McLaren for two years after eight years as Ferrari’s chief technology officer, told Yahoo Finance in an interview at Monterey Auto Week. “We want to have people here. … We talk to everyone – without arrogance.”

This could be read as a not-so-veiled jab at Ferrari, given that the Italian luxury sports car maker is notorious for secrecy, invitation-only events and selling new vehicles only to current or favored customers.

Read more here.
Monday, August 26, 2024 at 16:49 GMT+2

Dow rises 200 points as Nasdaq falls, Nvidia falls 2%

Markets diverged on Monday as the Dow Jones Industrial Average (^DJI) surged more than 200 points to hit a new intraday high.

The S&P 500 (^GSPC) erased earlier gains to fall 0.3%, while the Nasdaq Composite (^IXIC) fell more than 1%, led by a drop in Nvidia (NVDA) shares.

The AI chip heavyweight will report quarterly results this Wednesday after the market closes.

EV giant Tesla ( TSLA ) also fell more than 3%, weighing on the S&P 500 and Nasdaq.
Monday, August 26, 2024 at 16:31 GMT+2

Dow gains 200 points, hits intraday record

The Dow Jones Industrial Average (^DJI) rose more than 200 points, or 0.5%, on Monday morning to hit a new intraday high of 41,394.10.

Energy and Materials led gains on Monday. Meanwhile, tech stocks lagged, with the tech-heavy Nasdaq Composite (^IXIC) slipping as much as 0.7%, while the S&P 500 (^GSPC) was slightly lower.
Monday, August 26, 2024 at 15:42 GMT+2

S&P 500 inches to record high

The S&P 500 (^GSPC) rose 0.3% on Monday, nearing record highs since July. The index was less than 0.5% away from its July 16 record close of 5,667.20.

The Dow Jones Industrial Average (^DJI) rose 0.3% on Monday. The Nasdaq Composite (^IXIC) moved just above the flat line after opening slightly lower.
Monday, August 26, 2024 at 15:31 GMT+2

Stocks open mixed as investors focus on Nvidia’s earnings this week

Stocks traded mixed on Monday as investors turned their attention to a busy week led by Nvidia’s (NVDA) earnings report.

The S&P 500 (^GSPC) rose about 0.1%, while the Dow Jones Industrial Average (^DJI) rose about 0.2%. The Nasdaq Composite (^IXIC) fell just below the flat line after the major indexes rose on Friday.

The focus this week is firmly on Nvidia’s earnings. Much is riding on these results as the heavy AI chip has been a major driver of the markets this year. Shares of Nvidia were little changed on Monday morning after a 4.5% gain on Friday.

Stocks neared new highs on Friday after Fed Chairman Jerome Powell made it clear the central bank is ready to move to cut interest rates in September. The benchmark S&P 500 is less than 1% away from breaking the closing high set in July.