US markets had a mixed start to the final trading week of the month of June as investors rotated out of outperforming semiconductor stocks. The Dow Jones ended the day with gains of 260 points but the S&P 500 and the Nasdaq ended lower.
In fact, the tech-heavy index declined over 1% to mark its worst day since April. The S&P 500 shed 0.3%. Losses were led by Nvidia, which fell another 7% after Friday's 4% fall. The stock is now down 13% in the last three trading sessions after briefly becoming the most valuable company in the world. The stock shed $430 billion in market capitalisation on Monday.
Nvidia's fall took down other semiconductor companies as well, with Super Micro Devices declining nearly 9%, Qualcomm dropping 5.5%, while Broadcom fell 4%.
Renaissance Macro Research’s Jeff deGraaf told CNBC that the summer is typically a tough time sector, noting that the third quarter typically registers as the worst period for the industry.
“The good news is I think Nvidia is still in the long-term uptrend,” he said. “I think these corrections probably prove to be buyable. You just have to temper that sentiment.”
To Marko Kolanovic at JPMorgan Chase & Co., the shrinking share of stocks driving US equity indexes is worrying.
“Rising markets on narrowing breadth has historically been an ominous sign,” he wrote.
Just a handful of “higher quality” megacaps driving the performance of US stocks shows the market is focusing more on softening economic growth, than on inflation and rates, according to Morgan Stanley strategists led by Mike Wilson. Stick to high quality large caps and defensives, they added.
The team also highlighted that a “narrow breadth” is not necessarily a bad thing going by historic performance. Until growth slows in “a more meaningful way,” the team expects narrow market performance to persist.
“The stock market is not in a bubble, and while megacap growth stock valuations are stretched, stock prices have not decoupled from fundamentals as they did during the tech bubble of 2000,” said Emily Bowersock Hill at Bowersock Capital Partners.
(With Inputs From Agencies.)
In fact, the tech-heavy index declined over 1% to mark its worst day since April. The S&P 500 shed 0.3%. Losses were led by Nvidia, which fell another 7% after Friday's 4% fall. The stock is now down 13% in the last three trading sessions after briefly becoming the most valuable company in the world. The stock shed $430 billion in market capitalisation on Monday.
Nvidia's fall took down other semiconductor companies as well, with Super Micro Devices declining nearly 9%, Qualcomm dropping 5.5%, while Broadcom fell 4%.
Renaissance Macro Research’s Jeff deGraaf told CNBC that the summer is typically a tough time sector, noting that the third quarter typically registers as the worst period for the industry.
“The good news is I think Nvidia is still in the long-term uptrend,” he said. “I think these corrections probably prove to be buyable. You just have to temper that sentiment.”
Treasury 10-year yields fell two basis points to 4.23%. Bitcoin slumped below $60,000. Losses are piling up in the crypto market after its second-worst weekly decline of 2024, a reflection of cooling demand for Bitcoin exchange-traded funds and uncertainty over monetary policy.
To Marko Kolanovic at JPMorgan Chase & Co., the shrinking share of stocks driving US equity indexes is worrying.
“Rising markets on narrowing breadth has historically been an ominous sign,” he wrote.
Just a handful of “higher quality” megacaps driving the performance of US stocks shows the market is focusing more on softening economic growth, than on inflation and rates, according to Morgan Stanley strategists led by Mike Wilson. Stick to high quality large caps and defensives, they added.
The team also highlighted that a “narrow breadth” is not necessarily a bad thing going by historic performance. Until growth slows in “a more meaningful way,” the team expects narrow market performance to persist.
“The stock market is not in a bubble, and while megacap growth stock valuations are stretched, stock prices have not decoupled from fundamentals as they did during the tech bubble of 2000,” said Emily Bowersock Hill at Bowersock Capital Partners.
(With Inputs From Agencies.)
First Published: Jun 25, 2024 5:12 AM IST
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