Nvidia dips as S&P 500, Nasdaq slip from record

June 6, 2024

6 minutes read

US stocks were little changed on Thursday after a Big Tech-fueled winning session, with investors weighing fresh labor data amid growing hopes for interest rate cuts.

The S&P 500 (^GSPC) hovered near the flatline on the heels of a record close. The Dow Jones Industrial Average (^DJI) popped 0.2%, while the tech-heavy Nasdaq Composite (^IXIC) gave back early session to slip nearly 0.2%.

Stocks took a breather after the roaring rally that also lifted the Nasdaq to an all-time high on Wednesday. Tech stocks helped drive the gains, with Nvidia (NVDA) overtaking Apple (AAPL) as the second biggest US company.

However on Thursday Nvidia shares gave back early session gains to dip below the flatline, sending the AI chip giant’s market cap below the $3 trillion level. Other megacap techs held steady, with Apple and Meta (META) little changed.

Meanwhile, Treasury yields revived from declines that bolstered the stock rally. The benchmark 10-year yield (^TNX) edged up to around 4.30%, coming off its lowest level since March hit Wednesday.

The market has greeted recent soft economic readings as a reason to put a Federal Reserve policy pivot back on the table, with the ADP private payrolls miss just the latest sign of a labor market cooldown. Traders now see a 69% chance of a September rate cut, versus around 50% a week ago, according to the CME FedWatch tool.

Across the pond, the European Central Bank cut interest rates by 25 basis points on Thursday for the first time since 2019, in a widely anticipated move.

Weekly US jobless claims released on Thursday morning came in at 229,000 versus 220,000 expected by economists. The data gives investors another clue as to whether the Fed will nail its wished-for soft landing for the economy. But the countdown is on for the May monthly jobs report on Friday, seen as pivotal for stocks.

In individual movers, Lululemon (LULU) shares popped 4% after the athleisure wear maker boosted its profit outlook and stock buyback program.

Live8 updates

Thu, June 6, 2024 at 4:45 PM GMT+1

Nvidia pulls back sending market value below $3 trillion

Nvidia’s (NVDA) valuation fell below the $3 trillion mark on Thursday, a day after the company achieved the feat.

The AI chip giant opened higher but quickly fell. The stock was trading down more than 1% at around 11:45 a.m. ET.

Nvidia shares are is still up about 150% year-to-date.

Read more here.
Thu, June 6, 2024 at 4:08 PM GMT+1

Oil gains as ECB lowers rates, Saudi Arabia signals flexibility on output cut phaseout

Oil gained on Thursday after the European Central Bank lowered its key interest rate and OPEC leader Saudi Arabia signaled it still prioritizes price stability, signaling it could change an earlier decision to phase out some voluntary cuts starting this year.

West Texas Intermediate (CL=F) futures rose 0.8% while Brent (BZ=F), the international benchmark price, also rose nearly 1%.

Earlier this week crude fell following a decision by the oil alliance to keep most of its production cuts in place, but start phasing out voluntary decreases starting in October. The market had widely expected all the cuts to stay in place through 2024.

On Thursday the ECB lowered its key rate by 25 basis points for the first time since 2019, in a move widely anticipated.

Lower interest rates tend to spur economic activity which increases demand for oil and gas.
Thu, June 6, 2024 at 3:02 PM GMT+1

Nvidia reverses earlier gains, dips into negative territory

Nvidia (NVDA) fell into negative territory following a gain of 2.6% in early trading.

The stock reached an all-time high of $1,255.87 shortly after the market open, but then declined as much as 3% by 10 a.m ET.

Nvidia’s decline has sent the Nasdaq Composite into negative territory
Thu, June 6, 2024 at 2:33 PM GMT+1

Stocks steady as Nvidia inches higher

US stocks were little changed on Thursday morning following a tech-fueled rally that sent the S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) to records.

Nvidia (NVDA) opened slightly higher after the AI darling surpassed the $3 trillion market cap level in the prior session.

On Thursday morning, the S&P 500 and the Dow Jones Industrial Average (^DJI) hovered around the flatline. The Nasdaq rose about 0.1%.

Investors have their eyes set on the highly anticipated jobs report to be released on Friday morning.
Thu, June 6, 2024 at 1:55 PM GMT+1

The commercial PC market is rebounding

Two makes a trend, in my books.

Results out of the major PC makers recently have suggested a rebound in the commercial PC market, at long last.

Loop Capital’s John Donovan is out with a note this morning providing more insight into the emerging trend:

“The more we dig into this sector, frankly the news and updates are becoming increasingly exciting. All the ingredients are present for a protracted and extended refresh cycle. Among the inputs are the finalization of back-to-work doctrines, an extended and prolonged lack of upgrades since the pandemic (this is also in play on the consumer side to a degree), the Windows 10-11 rollover – and this is leading to growing optimism. Add to this the simple fact that AI PC solutions will undoubtedly carry higher ASPs, particularly on the commercial side of the ledger, and the optimism appears to be realistic. Keep in mind that corporations upgrading can simply not go the “cheap route” as AI innovations would render “just good enough solutions” obsolete, so we see a roadmap to a level of “overbuying” in the near future. More good news for the PC OEMs.”

Here’s what HP Inc. (HPQ) CEO Enrique Lores told me about this rebound.
Thu, June 6, 2024 at 12:44 PM GMT+1

A new face on the Walmart board

A meaningful new side hustle for one of the most popular CEOs in the fast-food industry.

Chipotle (CMG) CEO Brian Niccol has been officially elected as a director of the Walmart (WMT) board. He is now the fifth new, independent director Walmart has onboarded since 2017, CEO Doug McMillon said Wednesday morning prior to the shareholders’ vote.

Niccol takes the spot of longtime board member Rob Walton (son of Walmart founder Sam Walton) who retired as of Wednesday.

This isn’t Niccol’s first rodeo as a board member outside the confines of Chipotle. He previously served on the boards of KB Home (KBH) and Harley-Davidson (HOG).

The addition of Niccol makes a lot of sense.

Both Chipotle and Walmart have seen success in recent years as value-conscious consumers seek items that they believe allow them to stretch their dollars. Niccol has also led the charge on digital ordering at Chipotle, whereas McMillon has led a digital rebirth at Walmart.

While other food chains struggled to keep traffic up last quarter, Chipotle saw its same-store sales jump by 7%, in part thanks to Niccol’s efforts.

A similar vibe at Walmart: Its US same-store sales increased 3.9% year-over-year.

Shares of the burrito chain are up nearly 38% year-to-date, while Walmart shares are up more than 26%. It’s also worth noting that Walmart recently conducted a 3-for-1 stock split, while Chipotle is awaiting shareholder approval for its 50-for-1 split.
Thu, June 6, 2024 at 10:53 AM GMT+1

Hey, before you get excited about this Lululemon quarter

The bears raided Lululemon’s (LULU) stock prior to its earnings report last night, so I get the 9% pre-market pop on results that weren’t that brutal.

But this wasn’t a typical Lululemon quarter (strong double-digit growth at each division) by any means, and the positive reaction may be overdone.

Of worry is that comparable sales in the Americas division were unchanged versus the prior year. The company called out misses with customers in colors, usually not a good sign of future demand. (I used to cover the stock as an analyst — believe me, this isn’t a good indicator.)

“We advise investors to be sellers on any strength, the Lululemon brand and its fundamentals have peaked, in our view, and we anticipate relentless competition ahead,” said Jefferies analyst Randal Konik in a client note this morning.

Konik reiterated an under-perform rating on the stock.

Makes a lot of sense.
Thu, June 6, 2024 at 10:44 AM GMT+1

Good to learn the AI terminology

If you are going to invest in AI, it’s good practice to understand the lingo.

And that includes yours truly, who isn’t investing in AI but is writing way more about it than I thought I would a decade ago.

Helpful insight into the topic of “liquid cooling” below in my chat with HPE (HPE) CEO Antonio Neri on Yahoo Finance Live. I think you will be hearing more about this, given the power that new AI chips generate.

I also found what Neri said about Nvidia (NVDA) to be of interest.