Nvidia leads sell-off, losing $278bn in market value
03 September 2024 - 22:40
byChibuike Oguh
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New York — US stocks slumped on Tuesday, at the start of one of the market’s historically worst months, ahead of data likely to influence how much the Federal Reserve will lower interest rates.
Market sentiment fell as Institute for Supply Management (ISM) data on Tuesday showed US manufacturing remained subdued despite a modest improvement in August from an eight-month low in July.
September is regarded one of the worst months for stock market performance based on data stretching back to the 1950s, said Jason Browne, president at Alexis Investment Partners in Montgomery, Texas.
“We had a weak ISM report come out this morning, but we do believe seasonality is a big factor here especially when you’ve had such a solid performance for the year until the end of last month,” Browne said.
“Everybody is reporting about how September is such a horrible month and that tends to feed on itself.”
The so-called Magnificent Seven megacap technology stocks, which have led this year’s rally, slumped, led by Nvidia, Alphabet, Apple and Microsoft.
According to preliminary data, the S&P 500 lost 118.64 points, or 2.10%, to end at 5,529.76 points, while the Nasdaq Composite lost 576.06 points, or 3.25%, to 17,137.56. The Dow Jones industrial average fell 618.72 points, or 1.49%, to 40,944.36.
The S&P 500 industrials sector fell more than 1.6% on Tuesday, with stocks such as Caterpillar and 3M weighing on the blue-chip Dow as well.
Traders are awaiting several labour market reports ahead of Friday’s nonfarm payrolls data for August.
The Fed’s meeting later in the month will be closely observed following chair Jerome Powell’s recent support for easing monetary policy.
Odds of a 25 basis point (bps) interest rate cut are at 63%, the CME Group’s FedWatch Tool showed, while those for a bigger 50 bps reduction are at 37%.
Shares of heavyweight Nvidia tumbled on Tuesday, with Wall Street’s chip index slumping 7% as investors softened their optimism about artificial intelligence (AI).
Nvidia dropped over 9.5%. The result was a decline of $278bn on the day.
With Tuesday’s decline, Nvidia’s stock has now fallen 13% since last Wednesday, when its quarterly forecast failed to meet lofty expectations of investors who drove a dizzying rally in its stock.
“September is seasonally a very weak month of the year, so I think people are nervous,” said Dennis Dick, a trader at Triple D Trading. “I don’t think the AI rally is over.”
Intel dropped 7% after reports said CEO Pat Gelsinger and key executives are expected to present a plan to the company’s board of directors to slice off unnecessary businesses and revamp capital spending at the struggling chipmaker.
Tesla fell after Reuters reported that the electric vehicle maker plans to produce a six-seat variant of its Model Y car in China from late 2025.
Boeing dropped after Wells Fargo downgraded the planemaker’s shares to “underweight” from “equal weight”.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Wall Street slides on fears of US slowdown
Nvidia leads sell-off, losing $278bn in market value
New York — US stocks slumped on Tuesday, at the start of one of the market’s historically worst months, ahead of data likely to influence how much the Federal Reserve will lower interest rates.
Market sentiment fell as Institute for Supply Management (ISM) data on Tuesday showed US manufacturing remained subdued despite a modest improvement in August from an eight-month low in July.
September is regarded one of the worst months for stock market performance based on data stretching back to the 1950s, said Jason Browne, president at Alexis Investment Partners in Montgomery, Texas.
“We had a weak ISM report come out this morning, but we do believe seasonality is a big factor here especially when you’ve had such a solid performance for the year until the end of last month,” Browne said.
“Everybody is reporting about how September is such a horrible month and that tends to feed on itself.”
The so-called Magnificent Seven megacap technology stocks, which have led this year’s rally, slumped, led by Nvidia, Alphabet, Apple and Microsoft.
According to preliminary data, the S&P 500 lost 118.64 points, or 2.10%, to end at 5,529.76 points, while the Nasdaq Composite lost 576.06 points, or 3.25%, to 17,137.56. The Dow Jones industrial average fell 618.72 points, or 1.49%, to 40,944.36.
The S&P 500 industrials sector fell more than 1.6% on Tuesday, with stocks such as Caterpillar and 3M weighing on the blue-chip Dow as well.
Traders are awaiting several labour market reports ahead of Friday’s nonfarm payrolls data for August.
The Fed’s meeting later in the month will be closely observed following chair Jerome Powell’s recent support for easing monetary policy.
Odds of a 25 basis point (bps) interest rate cut are at 63%, the CME Group’s FedWatch Tool showed, while those for a bigger 50 bps reduction are at 37%.
Shares of heavyweight Nvidia tumbled on Tuesday, with Wall Street’s chip index slumping 7% as investors softened their optimism about artificial intelligence (AI).
Nvidia dropped over 9.5%. The result was a decline of $278bn on the day.
With Tuesday’s decline, Nvidia’s stock has now fallen 13% since last Wednesday, when its quarterly forecast failed to meet lofty expectations of investors who drove a dizzying rally in its stock.
“September is seasonally a very weak month of the year, so I think people are nervous,” said Dennis Dick, a trader at Triple D Trading. “I don’t think the AI rally is over.”
Intel dropped 7% after reports said CEO Pat Gelsinger and key executives are expected to present a plan to the company’s board of directors to slice off unnecessary businesses and revamp capital spending at the struggling chipmaker.
Tesla fell after Reuters reported that the electric vehicle maker plans to produce a six-seat variant of its Model Y car in China from late 2025.
Boeing dropped after Wells Fargo downgraded the planemaker’s shares to “underweight” from “equal weight”.
Reuters
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