S&P 500 Holds Gains Even as Nvidia Continues to Fall: Markets Close

(Bloomberg) — Stocks rebounded from earlier losses as several other industries outside the tech world advanced, riding out a selloff that shaved almost $400 billion from Nvidia Corp.’s value.

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While the S&P 500 eked out gains, a decline in the giant chip maker raised speculation that the growth in the industry that has fueled the bull market was about to take a breather. Nvidia extended a three-day course to more than 10% – the technical threshold of a correction. The firm has become the most expensive stock on the benchmark US gauge, with its shares trading at 23 times projected sales over the next 12 months.

After a tech-led rally in stocks, Deutsche Bank’s Binky Chadha says US stocks are set to stall. There is a lot of good news floating around the markets, and if that optimism turns out to be unwarranted, there could be downside risks, noted Lori Calvasina at RBC Capital Markets. For John Stoltzfus at Oppenheimer, while some short-term gains should be expected, the bull market looks sustainable.

“The stock market is not in a bubble, and while megacap growth stock valuations have stretched, stock prices haven’t been disconnected from fundamentals like they did during the tech bubble of 2000,” said Emily Bowersock Hill at Bowersock Capital Partners. “Right now, the market is rewarding companies for delivering strong earnings and punishing those that don’t.”

The S&P 500 hit around 5,480, led by gains in energy and financial stocks. The Nasdaq 100 fell after coming very close to the 20,000 mark last week. Nvidia sank about 5% on Monday, although some megacaps such as Apple Inc. and Tesla Inc. they grew up. The Dow Jones Industrial Average has outperformed.

10-year Treasury yields advanced a basis point to 4.27%. Bitcoin fell below $61,000.

For Matt Maley at Miller Tabak, if weakness in some large-cap tech names spreads to the rest of the group, it’s likely to create some problems for the broader market. At least in the short term.

“A downturn in the tech sector is certainly possible, even if the sector does well over the summer months in general,” Maley noted. “Even if you agree with the most bullish scenario for the AI ​​phenomenon for the second half of 2024, neither group moves in a straight line.”

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The strategist noted that the upcoming results from Micron Technology Inc. on Wednesday could be key on this front.

More broadly, last week saw some of the largest inflows on record into large-cap tech/growth funds, noted Jonathan Krinsky at BTIG.

“This feels like a chalk mark after the run we’ve had,” Krinsky said. “We remain concerned about a short-term softening of many leaders from year to day. If the S&P 500 is to avoid a bigger pullback in July, bulls should see the continued rotation below the surface.

According to Morgan Stanley strategists led by Mike Wilson, only a handful of “higher quality” megacaps driving US stock performance show the market is focusing more on softening economic growth than on inflation and rates. Stick to large caps and high-quality protection, they added.

The team also emphasized that a “narrow width” is not necessarily a bad thing after historical performance. Until growth slows in “a more meaningful way,” the team expects the market’s tight performance to continue.

Corporate Highlights:

• Trump Media & Technology Group Corp. rose after an announcement late Friday that the firm expected to receive more than $69.4 million in proceeds from the exercise of cash warrants last week.

• Apple Inc. risks billions of euros in new fines over its App Store rules after European Union antitrust regulators escalated a growing conflict over rules that strike at the heart of the iPhone maker’s business model.

• Shares of Alnylam Pharmaceuticals Inc. rose after its drug succeeded in treating a progressive and deadly form of heart disease, potentially opening a new avenue for the company’s best-selling product.

• GSK Plc has lost to Pfizer Inc. in a contract to supply millions of doses of its blockbuster RSV vaccine to the UK, as a setback to the local pharmaceutical giant.

• Sonoco Products Co. agreed to buy Eviosys, a maker of cans and other packaging, from KPS Capital Partners for about $3.9 billion.

• Eurofins Scientific SE took its biggest dive in more than two decades after the lab testing company was targeted by Carson Block’s Muddy Waters Research.

• Online fashion retailer Shein confidentially filed documents with UK authorities for a possible listing in London, according to people familiar with the matter.

• Tencent Holdings Ltd.’s Dungeon & Fighter Mobile more than doubled the sales of Chinese best-seller Honor of Kings in its first month, according to an independent study, suggesting the online entertainment leader may have finally found a franchise to replace its legacy titles . .

This week’s highlights:

• US Conference Board consumer confidence on Tuesday

• The Fed’s Lisa Cook, Michelle Bowman speak Tuesday

• US new home sales on Wednesday

• China’s industrial earnings on Thursday

• Eurozone economic confidence, consumer confidence, on Thursday

• US Durable Goods, Initial Jobless Claims, GDP, Thursday

• Nike releases earnings on Thursday

• Japan Tokyo CPI, unemployment, industrial production, Friday

• US PCE inflation, spending and income, consumer sentiment at the University of Michigan on Friday

• Fed Thomas Barkin of the Fed on Friday

Some of the main movements in the markets:

INVENTORY

• The S&P 500 was up 0.3% as of 12:30 p.m. New York time.

• Nasdaq 100 fell 0.4%

• The Dow Jones Industrial Average rose 0.9%

• MSCI World Index rose 0.5%

currencies

• The Bloomberg Dollar Spot Index fell 0.3%

• The euro rose 0.3% to $1.0728

• The British pound rose 0.3% to $1.2680

• The Japanese yen was little changed at 159.67 per dollar

Cryptocurrencies

• Bitcoin fell 4.4% to $60,873.71

• Ether fell 4.4% to $3,281.6

BONDS

• The 10-year Treasury yield advanced one basis point to 4.27%

• Germany’s 10-year yield was little changed at 2.42%

• Britain’s 10-year yield was little changed at 4.08%

wares

• West Texas Intermediate crude rose 1.1% to $81.61 a barrel

• Spot gold rose 0.3% to $2,329.19 an ounce

This story was produced with the help of Bloomberg Automation.

–With assistance from Vildana Hajric, Sujata Rao, Catherine Bosley, Matthew Burgess and Jeran Wittenstein.

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