Stock market today: Dow jumps while Nvidia slides 6%, drags on Nasdaq
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US stocks diverged Monday as chip heavyweight Nvidia's (NVDA) continued slide dragged on the Nasdaq to start the final week of another rip-roaring quarter on Wall Street.
The benchmark S&P 500 (^GSPC) fell 0.3%, while the tech-heavy Nasdaq Composite (^IXIC) fell more than 1% amid a more than 6% slide for Nvidia. The Dow Jones Industrial Average (^DJI) jumped 0.7%, or more than 200 points, as investors moved into energy and financials sectors.
Stocks are hoping to add a punchline to what's been a high-flying quarter thus far. The S&P 500 is up more than 4% this quarter, and the Nasdaq has surged around 7% on the back of an AI-driven rally.
That rally, however, has shown signs of fatigue. Nvidia, so far 2024's darling of Wall Street is down more than 12% from its record peak last week.
The macroeconomic front, as well as renewed focus on the US political scene, could grab more of the spotlight this week. On the latter point, US President Joe Biden and presumptive Republican nominee Donald Trump are set for their first debate Thursday evening. Yahoo Finance's Ben Werschkul has a good primer on what to watch from a US economic perspective.
And then: inflation. The Personal Consumption Expenditures (PCE) index will be released on Friday morning. This index contains the "core" PCE measure, which is most closely watched by the Federal Reserve.
Economists expect core PCE rose just 0.1% last month, which would be the slowest monthly rise since last November. Such a print would add to a string of recent positive data that could ease Fed policymakers' concerns about rate cuts this year. Traders expect the Fed to begin cuts in September, according to the CME FedWatch tool.
Dow jumps as investors rotate out of Nvidia, Nasdaq slips
US stocks ended the session mixed on Monday as investors rotated out of chip heavyweight Nvidia (NVDA).
The benchmark S&P 500 (^GSPC) closed down 0.3%, while the tech-heavy Nasdaq Composite (^IXIC) fell more than 1% amid a more than 6% slide for Nvidia.
The Dow Jones Industrial Average (^DJI) jumped 0.7%, or more than 250 points as investors flocked towards Energy and Financials.
The S&P 500 Energy Select ETF (XLE) gained more than 2.5% while Financials (XLF) gained roughly 1%.
Nvidia, so far 2024's darling of Wall Street, lost ground for a third straight day after touching new highs last week.
On the macro front, investors will watch for Friday's print showcasing the Personal Consumption Expenditures (PCE) index. The gauge contains the "core" PCE measure, which is most closely watched by the Federal Reserve.
How Lilly is joining Novo in the crusade to circumvent Medicare's block on weight-loss drugs
Yahoo Finance's Anjalee Khemlani reports:
Medicare is the largest individual insurance payer of health costs in the country. So it's no wonder that drugmakers want its seal of approval for reimbursement.
That's especially true of the weight-loss drug market leaders Novo Nordisk (NVO) and Eli Lilly (LLY). Both companies have lobbied for support for a bill — the Treat and Reduce Obesity Act (TROA) — which has been reintroduced annually in Congress for over a decade, with little attention until recently.
The two companies are also pursuing another avenue to gain Medicare coverage for their GLP-1 drugs: coming up with other benefits that will get Medicare's blessing.
Novo's weight-loss drug, Wegovy, recently scored a win with its cardiovascular benefit and will now be covered by Medicare. And on Friday, Lilly announced it had applied to get expanded-use approval for its weight-loss drug, Zepbound, as a solution for sleep apnea.
Read more here.
The case for the market broadening remains limited: Morgan Stanley
A popular call on Wall Street to start 2024 was for a broadening of the stock market rally.
But, in large part, that hasn't happened this year, with Nvidia (NVDA) alone representing about one-third of the S&P 500's gains this year.
While some have recently highlighted that a positive trend in earnings to end 2024 could still support a broadening, Morgan Stanley's chief investment officer Mike Wilson wrote in a note on Sunday that the downside surprises in economic data put a cap on any broadening to come. Wilson highlighted Citi's Economic Surprise Index, which measures the extent to which data has come in better than forecast.
The index has been tracking lower for much of 2024 and just hit its lowest level in more than a year, dispelling a common narrative about a stronger-than-expected economy supporting other areas of the market outside of large-cap corporations.
"With macro data broadly coming in softer [year-to-date], many lower quality and economically sensitive areas of the market have lagged, while a narrow list of higher quality mega caps have carried performance." Wilson said. "In our view, this is a sign the market is becoming more focused on growth softening and less focused on inflation and rates."
So investors have piled into companies that have thrived despite high interest rates and slowing economic growth. Wilson noted that this extends beyond a few large tech names to other stocks like Eli Lilly (LLY), Chipotle (CMG), and Costco (COST), which have all handily outperformed the S&P 500 this year. But, it likely won't extend to small-cap stocks at this point, Wilson said.
Importantly, Wilson added that this environment can persist without the broader market heading lower.
"Interestingly, narrow breadth does not necessarily mean weak returns looking forward," Wilson wrote. "The average cap-weighted index return 6 months after narrow breadth readings is 4%."
Apple's regulatory cloud is getting thicker
Yahoo Finance's Alexis Keenan reports:
Apple’s (AAPL) legal headaches mounted Monday with the news that European Union regulators found it violated a new law designed to rein in tech giants.
The EU’s European Commission said it informed Apple that the rules of Apple's lucrative App Store violated the Digital Markets Act by illegally blocking software developers from telling customers how to access content outside the app store.
The regulator also announced it had opened a separate investigation into Apple’s practice of charging a "core technology fee" for iOS apps available in the EU.
The heightened scrutiny overseas comes as Apple defends itself in the US against antitrust charges from the US Justice Department and 16 state attorneys general. They sued Apple in March, alleging that it used illegal tactics to hold on to a monopoly in the smartphone market.
Apple is fighting the US lawsuit; it has yet to comment on the new EU actions. Investors shrugged off the news, sending Apple’s stock up more than 1%.
Read more here.
Oil jumps on escalating tensions abroad, on pace for monthly gain
Oil jumped on Monday to kick off the final week of June amid flaring tensions abroad
West Texas Intermediate (CL=F) rose more than 1% to hover above $81 per barrel, while Brent (BZ=F), the international benchmark price, inched up almost 1% to exchange hands near $86 per barrel.
Analysts point out investors expect the Federal Reserve to cut rates this fall. Lower rates spur economic activity.
"Ideas the Fed will cut interest rates by ).25 at its Sept meeting has also gained hedge funds attention with heavy fund buying in crude and fuels seen most of last week," Dennis Kissler, senior vice president at BOK Financial, said in a recent note to clients.
Escalating tensions in the Middle East and the war between Russia and Ukraine are also sending crude prices higher.
Oil is on track to close out the month of June in positive territory with WTI and Brent set to gain more than 5% and 4.5%, respectively.
Energy and Financials outperform, help lift Dow 350 points
Energy and financial-related stocks led the market gains on Monday, helping lift the Dow Jones Industrial Average almost 1%, or about 350 points.
The S&P 500 (^GSPC) also gained about 0.3% while the tech-heavy Nasdaq Composite (^IXIC) was pressured by a drop in shares of AI chip giant Nvidia (NVDA).
Investors were rotating out of Nvidia and into more defensive and cyclical sectors. The S&P 500 Energy Select ETF (XLE) gained more than 2% while Financials (XLF) gained more than 1%.
Nvidia extends losses, down more than 5%
Nvidia (NVDA) stock hit session lows on Monday morning as investors rotated out of the AI chip giant.
Shares declined as much as 5%, extending recent losses. The stock is down more than 11% from its all-time closing high of $135.58 last Tuesday, June 18.
Monday was the third consecutive day of losses for shares of the chip giant.
Bitcoin declines 4%, hovers around $61,000
Bitcoin (BTC-USD) hovered above $61,000 per token on Monday, reaching a more-than-one-month low earlier in the day.
The cryptocurrency declined more than 4% over the past 24 hours, extending losses from the last two weeks.
Bitcoin spot ETFs have seen six straight days of outflows. Despite the downward trend, bitcoin is up almost 40% year to-date.
S&P 500 edges higher, Nasdaq hovers around flatline
The S&P 500 (^GSPC) flipped into green territory Monday morning while the tech-heavy Nasdaq Composite (^IXIC) hovered around the flatline as AI chip giant, Nvidia (NVDA) fell more than 3% during the session.
The chip maker has shown signs of fatigue recently after repeatedly helping lift the major averages to record highs this month.
Energy and utility related stocks did the heavy lifting on Monday, leading the overall market gains.
Stocks mixed to kick off last week of June, Nvidia extends recent slip
Stocks opened mixed on Monday to kick off the last week of June.
The S&P 500 (^GSPC) fell just below the flatline while the tech-heavy Nasdaq Composite (^IXIC) fell about 0.4%. The Dow Jones Industrial Average (^DJI) rose roughly 0.3%.
Nvidia (NVDA) extended its recent slip from all-time highs after buoying the S&P 500 and Nasdaq to multiple records earlier this month.
Nvidia fell more than 2% at the open.
On the macro front, investors will be keeping a close eye on the Personal Consumption Expenditures (PCE) index due to be released on Friday morning. This index contains the "core" PCE measure, which is most closely watched by the Federal Reserve.
Another head-shaking moment at Under Armour
After the close on Friday, Under Armour (UAA) disclosed an agreement to settle securities class-action litigation for $434 million.
The 2017 complaint was on behalf of those who purchased Under Armour Class A and Class C shares from Sept. 16, 2015, to Nov. 1, 2019. It alleged that founder and CEO Kevin Plank misrepresented the level of consumer demand for Under Armour products between Q3 '15 and Q4 '16, misled investors, and defrauded the market under the Securities Exchange Act of 1934.
Upon court approval, all claims against the company and Plank would be resolved.
The agreement, in principle, does not admit fault or wrongdoing, and the company consistently denied accusations and claimed sales practices, accounting, and disclosure were appropriate. The settlement rationale is to avoid prolonged litigation, uncertainty, and distraction from the business according to Stifel analyst Jim Duffy.
“The settlement is a negative shock to the balance sheet, and moves the company to a net debt position from a previous net cash position, restricting financial flexibility (share repurchase capacity),” Duffy said.
Another head-shaking moment for the struggling brand. The other came several months ago, when Plank ousted Stephanie Linnartz to reclaim his CEO position. How the Under Armour board — even considering Plank controls the company via his voting structure — could let this guy run the company again is mind-boggling.
More on UA’s many stumbles below.
The question to start asking about Nvidia
Is Nvidia (NVDA) just too rich from a valuation perspective versus some other strong titans in tech?
Consider this one.
Nvidia shares trade at over 21x forward sales, up from 12x two months ago, points out the team at Creative Planning. This is a material premium over Microsoft (MSFT) at 12x and Apple (AAPL) at 8x.
