‘Magnificent Seven’ Drives Nvidia Gains Up 5%: Markets Wrap

(Bloomberg) — A rally in the world’s biggest technology companies lifted stocks, as traders took their time with weak economic reports.

Bloomberg’s Most Read

The stock extended its advance in June as Nvidia Corp. recovered after a US$430 billion drop, leading gains in the “Magnificent Seven” megacap group. The chipmaking giant suffered a three-day rout that sent it into a technical correction. Treasury bonds saw small movements ahead of a two-year, $69 billion auction that will kick off this week’s trio of note sales.

US consumer confidence declined due to a more subdued outlook for business conditions, the labor market and earnings. Home price gains slowed as potential buyers facing higher mortgage rates backed away. Fed Governor Michelle Bowman said she sees a number of upside risks to the inflation outlook and reiterated the need to keep borrowing costs elevated for some time.

“We believe the bull market we find ourselves in will not be derailed until we enter a recession or until the Fed changes interest rate policy from potential cuts to actual increases,” said Chris Zaccarelli of the Independent Advisor Alliance. “Expect volatility between now and the end of the year, but don’t expect the bull market to end without a change in the economy or the Fed’s stance.”

The S&P 500 surpassed 5,460 points, while the Nasdaq 100 rose 1%. Nvidia rose more than 5%. Carnival Corp. had an optimistic outlook. The nascent rally in transportation stocks will face a crucial test Tuesday night when FedEx Corp. release results that will shed light on the strength of the US economy.

10-year Treasury yields rose one basis point to 4.25%. Bitcoin hovered near $62,000. The loonie fluctuated as inflation unexpectedly rose in Canada, a setback for policymakers as they weigh further rate cuts next month.

Nvidia’s recent sell-off does not reflect a worsening outlook for the technology or the broader market, as other demand signals are positive, according to UBS.

“Nvidia’s correction should not be confused with a warning sign about the structural investment case for AI or the broader outlook for equities,” wrote Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management.

For Steve Eisman of Neuberger Berman Group, the chipmaker’s three-day drop is just a blip.

The story continues

The senior portfolio manager, best known for his short bet against subprime mortgages before the global financial crisis, owns “a lot” of the chipmaker’s shares and considers it a long-term bet that will be relevant in the coming years, he said. Tuesday in an interview with Bloomberg Television.

Bank of America Corp. said customers were net sellers of U.S. stocks for the first time in a month last week, with outflows led by hedge funds and institutions as retail investors bought shares.

BofA client outflows totaled $1.6 billion net in the week ended June 21, quantitative strategists led by Jill Carey Hall said Tuesday in a note to clients. At a sectoral level, technology and communications services led the entries. The financial sector recorded the largest outflows.

Investor positioning continued to reflect a preference for US stocks versus European stocks last week, according to strategists at Citigroup. A team led by Chris Montagu observed that the bullish positioning of the S&P 500 and the Nasdaq rose – but with slowing momentum in the latter.

Commodity Trading Advisors, or CTAs, are estimated to hold $130 billion in long positions – or the 84th percentile – in global equities, after selling $29 billion last week, and will likely sell more in all trading scenarios. market this week, according to Goldman. Sachs Group Inc.

Derivatives and equity flows specialist Cullen Morgan estimates that CTAs would sell $36 billion worth of stocks, including $2.8 billion in S&P 500 futures this week in a falling market, and $15 billion in stocks in a stable market. Even if the stock rose, they are expected to sell $3 billion worth of shares.

Corporate Highlights:

• Exxon Mobil Corp. has taken the first step towards what will be its seventh oil project in Guyana, a clear sign that the supermajor intends to expand the South American country’s oil production over the next decade.

• Boeing Co. has offered to acquire Spirit AeroSystems Holdings Inc. for about $35 a share in a deal financed primarily with stock, according to people familiar with the matter.

• Airbus SE is missing millions of parts that make up the company’s commercial aircraft, and the situation is getting worse, rather than better, for the world’s largest planemaker.

• Microsoft risks a hefty fine from the European Union after regulators accused the company of abusing its market power by bundling video conferencing app Teams with its other business software.

• OpenAI is taking additional steps to restrict China’s access to artificial intelligence software, enforcing an existing policy to block users in countries outside the territory it supports.

• AbbVie Inc. failed to win approval for a new Parkinson’s disease drug after U.S. regulators found problems at a contract manufacturing plant.

Main events this week:

• New home sales in the US, Wednesday

• China’s industrial profits, Thursday

• Eurozone economic confidence, consumer confidence, Thursday

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

• Nike releases results Thursday

• Japan Tokyo CPI, unemployment, industrial production, Friday

• US PCE Inflation, Spending and Income, Consumer Sentiment from the University of Michigan, Friday

• Fed’s Thomas Barkin Speaks on Friday

Some of the main movements in the markets:

Actions

• The S&P 500 was up 0.3% at 11:41 a.m. New York time

• The Nasdaq 100 rose 1%

• The Dow Jones Industrial Average fell 0.7%

• The Stoxx Europe 600 fell 0.2%

• The MSCI World index rose 0.2%

Coins

• The Bloomberg Dollar Spot Index rose 0.2%

• The euro fell 0.2% to $1.0709

• The British pound was little changed at $1.2678

• The Japanese yen was little changed at 159.70 per dollar

Cryptocurrencies

• Bitcoin rose 3.9% to $61,807.07

• Ether rose 3.1% to $3,412.2

Titles

• The yield on the 10-year Treasury note rose one basis point to 4.25%

• Germany’s 10-year yield little changed at 2.41%

• Britain’s 10-year yield fell one basis point to 4.07%

goods

• West Texas Intermediate crude fell 0.3% to $81.35 a barrel

• Spot gold fell 0.6% to $2,320.20 an ounce

This story was produced with help from Bloomberg Automation.

–With assistance from Vildana Hajric, Alex Nicholson, Jeran Wittenstein, Ryan Vlastelica, Aya Wagatsuma and Jason Scott.

Bloomberg Businessweek Most Read

©2024 Bloomberg LP