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Finally, Nvidia backed down last week.
Maybe so. The chip giant’s rise since last fall has been astonishing, but markets being markets, the recent rally was about to end. And it happened: Nvidia closed down 4% for the week and down 10% from its Thursday high through Friday’s close.
Nvidia (NVDA) It may fall further this week. He wasn’t invincible. Shares fell nearly 20% between March 25 and April 22, losing about $390 billion in market value. (This led to CNBC’s Jim Cramer announcing that the stock had moved from… “Star of the show for the game goats.”)
Nvidia then rebounded, jumping 71% over the next two months, taking $1.35 trillion in market cap (to $3.34 trillion). For one day, NVIDIA surpassed Microsoft (MSFT) hail (Camel) As the most valuable company in the world.
Related: Nvidia’s history and timeline: From GPU maker to AI pioneer
So, we’ll see what happens in the market that will give investors plenty of other things to think about next week. Here are four of the most important:
- The headline inflation report that the Fed will closely study.
- Many reports that reveal more about the health of the housing market.
- Earnings from FedEx (FDX) chip maker Micron Technology (in) And sports equipment giant Nike (to) .
- The big debate Thursday evening between President Joe Biden and former President Donald Trump.
Technology stocks rule the quarter
As of Friday, it’s been a great quarter for tech stocks, especially Nvidia (even going into last weekend), Apple and Arm Holdings. (arm) In addition to shoe maker Birkenstock Burke, and used car dealer Carvana (CVNA) The GameStop stock meme (GME) .
But it was less dramatic for most other S&P 500 sectors. Power is off at 5.7%. Crude oil is down 5.6% so far in June.
The S&P 500 rose 4% during the quarter, with the Nasdaq Composite up 8% and the Nasdaq-100 up 9%.
The Dow Jones Industrial Average is a bit of a laggard, down 1.7% during the quarter, but up 2.3% for June. It has been 23 days since it closed above 40,000 for the first time.
RELATED: Top Analyst Reconsiders Price Target for Apple Stock Price After AI Push
The big question now is whether the Nvidia-led downturn means trouble for the entire market. Maybe just because the 10 largest stocks in the S&P 500 by market cap include seven technology stocks, including Nvidia, Microsoft and Apple.
In May, according to the S&P and Dow Jones indices, the number 10 represented 34% of the total market capitalization of the S&P 500. If someone gets into trouble, it can become contagious.
But remember: The Fed still holds its key interest rate at 5.25% to 5.5%. If a real problem occurs, the Fed will almost certainly intervene.
More economic analysis:
- The stock’s record rally may be in vapors
- Consumers are taking advantage amid sticky inflation and a slowing labor market
- Even great people like Druckenmiller make mistakes. So learn from them.
Micron may be the earnings star of the week
Micron Technologies Wall Street is likely to excite the most this week. The chip company has evolved into a player in the artificial intelligence space. One of its new chips is used in Nvidia’s H200 graphics processing units. Micron’s fiscal third-quarter earnings are estimated at about 38 cents per share, up from a loss of $1.57 a year ago. Revenue of $6.7 billion would be a roughly 79% gain. The stock will rise 53.7% in 2024.
fedexThe global shipping company relies on a sound global economy, free of wars, conflicts, and inflation. Earnings are expected to be $5.36, up from $4.94 a year ago. However, revenue estimates are at $22.1 billion, which is flat from last year. The stock has risen 0.3% this year.
Nike It is expected to produce a 27% increase in profits. But revenues may not grow much, if at all, with estimates at $12.86 billion. The stock fell 10.5%. This reflects dissatisfaction with the world of sports clothing/equipment. On the plus side, the Boston Celtics wore Nike-designed uniforms on their run to the NBA championship this year, and their gear will be everywhere at the Paris Olympics.
RELATED: Fed rate cut timing changes after retail sales data
The big inflation report will be released on Friday
For most of the year, Wall Street has been obsessed with when the Federal Reserve will start cutting interest rates.
Most economic reports this week indicated that inflationary pressures have become relatively benign. In the event of a crisis, the Fed is unlikely to cut interest rates at its next meeting in July.
However, on Friday, the last trading day of the month, the Commerce Department will release its report Personal consumption expenditures report For the month of May.
This is the report that the Fed watches more closely than any other.
It measures changes in the prices of goods and services that consumers purchase, even if they are substituting for cheaper products.
Projections indicate that the rate of change in personal consumption expenditures from year to year could reach 3%, and perhaps as high as 2.6%. The April report put the annual figure at 2.7%.
Also scheduled this week:
- The Conference Board’s consumer confidence report for May is scheduled for release on Tuesday.
- The Fed’s “stress test” report, which aims to show which banks are healthier, is scheduled for release on Wednesday.
- The University of Michigan Consumer Confidence Index is scheduled for release on Friday.
Great housing reports
The housing sector has witnessed pressure for several years due to mortgage rates remaining at their highest levels in more than 20 years.
In addition, inventories of homes for sale or rent were very limited in part because owners did not want to take out low-interest mortgages. The result: house prices rise.
However, mortgage rates have been slowly declining since last fall, although rates remain well above the levels seen in 2020 and 2021.
Daily Mortgage News The latest estimate was 7.01% on a 30-year mortgage as of Friday. Freddie Mac weekly mortgage rates surveyIt came out on Thursday, setting the interest rate at 6.87%. Rates were as high as 7.5% in March and 8% last October.
On a $300,000 home with a $240,000 mortgage, a 7% LTV rate would result in a monthly principal and interest payment of $1,596. At 8%, the payment would be $1,761. Plus taxes and insurance.
Housing reports are:
- S&P CoreLogic Case-Shiller Home Price Indexes Tuesday.
- The Commerce Department reports new home sales on Wednesday.
- The National Association of Home Builders’ Pending Home Sales Index was released Thursday.
The first breaks down home sales and prices. The second measures new home sales. The latter is actually a measure of the creator’s confidence.
Reports may show some optimism due to low interest rates. The National Association of Realtors’ May report on existing home sales showed sales declining nationally.
The seasonally adjusted annual rate was 4.11 million, down slightly from April. But sales have fallen by more than a third since 2021.
census.gov
Will the discussion attract everyone’s attention?
President Joe Biden and former President Donald Trump will participate in the first two debates on Thursday evening.
The last time Democrat Biden and Republican Trump debated was in the fall of 2020.
It was basically a verbal battle over food, and the former president is still angry that he didn’t win that election.
Nor is the man young. Biden is 81, Trump just turned 78, and neither wants to lose.
Expect a lot of interruptions at the very least. Then, watch to see how the markets react.
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