(Bloomberg) — Stocks struggled to gain traction as a nearly $400 billion slide in Nvidia Corp. sparked speculation that the sector rally that fueled the bull market was due to take a breather.
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While several sectors outside the tech world advanced Monday, Nvidia extended its three-day rout to more than 10%, the technical threshold for a correction. The giant chipmaker has become the most expensive stock in the S&P 500 index, with its shares trading at 23 times projected sales over the next 12 months.
Following a tech-led rally, Deutsche Bank’s Binky Chadha said US stocks were about to take a breather. There’s a lot of good news in the markets, and if that optimism proves unwarranted, there could be downside risks, noted Lori Calvasina of RBC Capital Markets. For John Stoltzfus at Oppenheimer, even if the bull market seems sustainable, some profit taking is to be expected.
“We remain concerned about the short-term unraveling of many leaders since the start of the year,” said Jonathan Krinsky of BTIG. “If the S&P 500 is to avoid a deeper pullback in July, bulls need to see continued rotation beneath the surface.”
The S&P 500 was hovering near 5,460. Energy and financial stocks rose as technology retreated. The Nasdaq 100 fell after nearing the 20,000 mark last week. Nvidia sank about 6%. A gauge of chipmakers fell 2%, with 27 of its 30 stocks falling. The Dow Jones Industrial Average outperformed.
Yields on the 10-year Treasury were little changed at 4.26%. Bitcoin fell below $60,000. Losses are piling up in the crypto market after its second-worst weekly decline of 2024, a reflection of slowing demand for Bitcoin exchange-traded funds and uncertainty over monetary policy.
Miller Tabak’s Matt Maley said if weakness in a few big tech companies spills over to the rest of the group, it will likely create problems for the entire market. At least in the short term.
“A decline in the tech sector is certainly possible, even if the sector generally does well during the summer months,” Maley noted. “Even if you agree with the most optimistic scenario regarding the AI phenomenon for the second half of 2024, no group is moving in a straight line.”
The strategist noted that Micron Technology Inc.’s upcoming results on Wednesday could be key on that front.
“The stock market is not in a bubble, and while valuations for mega-cap growth stocks are stretched, stock prices have not become decoupled from fundamentals as they did during the 2000 tech bubble ” said Emily Bowersock Hill of Bowersock Capital Partners. “Currently, the market rewards companies that generate strong profits and punishes those that do not. »
Only a handful of ‘better quality’ mega-caps that drive US stock performance show the market is more focused on slowing economic growth than on inflation and rates, according to Morgan Stanley strategists led by Mike Wilson. . Stick to large caps and high-quality defensive stocks, they added.
The team also emphasized that “narrow scope” is not necessarily a bad thing given historical performance. Until growth slows “more significantly,” the team expects the market’s narrow performance to persist.
Company strengths:
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Trump Media & Technology Group Corp. soared after Friday evening’s announcement that the company expected to receive more than $69.4 million in proceeds from the cash exercise of warrants last week.
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Apple Inc. faces new multibillion-euro fines over App Store rules as European Union antitrust regulators escalated a growing conflict over rules that strike at the heart of the app maker’s business model ‘iPhone.
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Shares of Alnylam Pharmaceuticals Inc. soared after its drug was successful in treating a progressive and deadly form of heart disease, potentially opening a new path for the company’s best-selling product.
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GSK Plc lost a contract to Pfizer Inc. to supply millions of doses of its blockbuster RSV vaccine to the United Kingdom, a setback for the local pharmaceutical giant.
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Sonoco Products Co. agreed to buy Eviosys, a maker of cans and other packaging, from KPS Capital Partners for about $3.9 billion.
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Eurofins Scientific SE plunged the most in more than two decades after the lab testing company was targeted by Carson Block’s Muddy Waters Research.
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Online fashion retailer Shein has confidentially filed documents with British authorities for a possible listing in London, according to people familiar with the matter.
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Dungeon & Fighter Mobile from Tencent Holdings Ltd. more than doubled the sales of long-running Chinese bestseller Honor of Kings in its first month, according to an independent study, suggesting the online entertainment leader may have finally found a marquee franchise to replace aging titles. .
Key events this week:
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Consumer Confidence from the American Conference Board, Tuesday
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Fed’s Lisa Cook and Michelle Bowman to Speak Tuesday
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New home sales in the United States, Wednesday
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Chinese industrial profits, Thursday
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Eurozone economic confidence, consumer confidence, Thursday
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US Durable Goods, Initial Jobless Claims, GDP, Thursday
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Nike reports results on Thursday
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Japan Tokyo CPI, unemployment, industrial production, Friday
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U.S. PCE Inflation, Spending and Income, University of Michigan Consumer Sentiment, Friday
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Fed’s Thomas Barkin to Speak Friday
Some of the main market movements:
Actions
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The S&P 500 was little changed as of 1:24 p.m. New York time
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The Nasdaq 100 fell 0.8%
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The Dow Jones Industrial Average rose 0.6%
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The MSCI World index increased by 0.2%
Currencies
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The Bloomberg Dollar Spot Index fell 0.2%
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The euro rose 0.3% to $1.0723
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The British pound rose 0.2% to $1.2674
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The Japanese yen was little changed at 159.71 per dollar.
Cryptocurrencies
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Bitcoin fell 5.8% to $59,986.18
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Ether fell 4.6% to $3,274.88
Obligations
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The yield on 10-year Treasury bills changed little at 4.26%
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The German 10-year yield changed little at 2.42%
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The UK 10-year yield was little changed at 4.08%
Raw materials
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West Texas Intermediate crude rose 1.1% to $81.59 a barrel
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Spot gold rose 0.4% to $2,331.27 an ounce
This story was produced with the help of Bloomberg Automation.
–With help from Vildana Hajric, Sujata Rao, Catherine Bosley, Matthew Burgess and Jeran Wittenstein.
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