Nvidia recorded its largest daily decline since April, with a cumulative market value of approximately 430 billion US dollars (approximately 3.12 trillion yuan) evaporated in three trading days.
On Monday, June 24th local time, the three major US stock indexes fluctuated. As of the close, the Dow Jones Industrial Average rose 0.67%, the Nasdaq fell 1.09%, and the S&P 500 index fell 0.31%.
Federal Reserve's Daley warned on Monday that the US labor market is approaching a turning point, and further slowdown may mean higher unemployment rates. He said that it may be necessary to curb demand in order to bring inflation back to the central bank's target of 2%.
Technology stocks experience a significant pullback
On Monday, June 24th local time, the three major US stock indexes fluctuated. As of the close, the Dow Jones Industrial Average rose 260.88 points, or 0.67%, to 39411.21 points; The Nasdaq fell 192.54 points, or 1.09%, to 17496.82 points; The S&P 500 index fell 16.75 points, or 0.31%, to 5447.87 points.
The technology sector experienced a significant pullback, while energy and financial stocks rose. The Nasdaq 100 index fell more than 1% after approaching the 20000 point mark last week. Nvidia fell 6.68%, with a cumulative market value of approximately 430 billion US dollars (approximately 3.12 trillion yuan) evaporated in three trading days. The Chip Manufacturers Index fell 3.02%, with 29 out of 30 stocks falling. The yield of 10-year US treasury bond bonds fell 2 basis points to 4.23%. Bitcoin fell below $60000.
Some analysts believe that the pullback in technology stocks will put the US stock market at risk of a downturn in the short term. Deutsche Bank's Benquichada said that the US stock market will pause its rise after the tech led rebound ends. Lori Calvasina from the Capital Markets Department of Royal Bank of Canada pointed out that there is a lot of good news in the market, and if this optimism is proven to be unreasonable, there may be downside risks. Oppenheimer's John Stozfels believes that although the bull market seems sustainable, there should be some profit taking.
"The technology sector is definitely likely to decline," said Matt Marley of Miller Tabak. "Even if you agree that the artificial intelligence sector is still the best choice in the second half of 2024, it will not continue to rise." At the same time, this analyst believes that Micron Technology's upcoming performance on Wednesday will also be a focus of market attention. As of Monday's close, Micron Technology has fallen slightly by 0.38% to $139.01, with a cumulative increase of over 71% in stock price since the beginning of the year.
Wolfe Research and Citigroup, two investment banks, maintained a bullish rating on Micron Technology's stocks until the release of its third quarter financial report for the 2024 fiscal year. Wolfe Research has raised the target stock price of Micron Technology from $150 to $200, believing that the storage industry is in good condition and optimistic about the company's High Bandwidth Memory (HBM) business. Citigroup raised its target stock price from $150 to $175. Analysts are optimistic about Micron Technology's strategy of limiting memory supply and predict that its earnings per share for the 2025/2026 fiscal year may reach $20, with the HBM business contributing approximately $3.
Morgan Stanley strategist Mike Wilson stated that only a few "high-quality" super large cap stocks are driving the performance of the US stock market, indicating that the market is more focused on slowing economic growth rather than inflation and interest rates. They added that investors should adhere to investing in high-quality large cap stocks and defensive stocks.
Meanwhile, Federal Reserve's Daley warned on Monday that the US labor market is approaching a turning point, and further slowdown may mean higher unemployment rates. He said that it may be necessary to curb demand in order to bring inflation back to the central bank's target of 2%.
During a speech at the World Affairs Department of the California Federal Club in San Francisco on Monday, Daley said, "A slowdown in the future labor market may lead to an increase in unemployment rates, as companies not only need to adjust vacant positions, but also actual job positions." She said, "Currently, inflation is not the only risk we face."
Daley believes that the fluctuations in inflation data this year have not boosted people's confidence, despite recent data showing a slowdown in price growth. However, it is difficult to know whether the economy has truly embarked on a stable track. Last week, several Federal Reserve officials stated that before lowering interest rates, more evidence is needed to show that inflation is cooling down.
Nvidia still favored despite a sharp decline, but Eli Lilly's new drug triggered sector fluctuations
In terms of sectors, the 11 major sectors of the S&P 500 index rose 9 times and fell 2 times. Among them, the energy sector led the rise with a 2.73% increase, while stocks in the information technology sector experienced a significant decline.
Most popular technology stocks closed lower. Micro computers fell more than 8%, NVIDIA fell more than 6%, ARM and Qualcomm fell more than 5%, Broadcom, TSMC, and ASMC fell more than 3%, Netflix fell more than 2%, Intel fell more than 1%, Texas Instruments, Superelectronics Semiconductor, Microsoft, Micron Technology, Google A, Tesla, and Cisco fell slightly, while Apple, Lilly, and Meta rose slightly.
Nvidia fell 6.68%, marking its largest daily decline since April, closing at $118.110 and its latest market value at $2.91 trillion. The three consecutive days of decline have caused Nvidia's market value to evaporate by approximately $430 billion, bringing its total market value back below the threshold of $3 trillion. Last week, Nvidia briefly won the title of the world's largest company by market value. Neville Javelli, portfolio manager at Allspring Global Investments, said, "In the short term, investors may start to feel tired of artificial intelligence." Nevertheless, Nvidia is still favored by Wall Street. According to Bloomberg data, over 90% of analysts recommend buying NVIDIA stocks, with their target price for NVIDIA being about 12% higher than the current stock price.
"After a significant increase, Nvidia and its AI peers have reached the time for a pullback," said Jane Edmundson, TMX VettaFi Theme Strategy Director. "Investors may take profits at the end of the quarter and readjust their investment portfolios, but the fundamentals of Nvidia still exist."
Apples rose 0.31%. The European Commission has launched an antitrust investigation against Apple under the newly implemented Digital Markets Act (DMA). The focus of the survey includes whether Apple restricts app developers from introducing cheaper subscription methods to users beyond the App Store. The EU is concerned that Apple's App Store rules violate DMA and restrict free communication between developers and users. In addition, the EU has expressed concern about some new contract requirements from Apple, including "core technology fees" for third-party application developers. If the violation is ultimately confirmed, Apple may face a fine of up to 10% of its global annual revenue. The EU plans to announce its final decision in March next year.
Amazon fell 1.86%. According to Business Insider on Monday, Amazon is developing a consumer centric AI chatbot that will compete with OpenAI's ChatGPT and may be released later this year. According to Business Insider, the chatbot service codenamed "Metis" will be accessed through a web browser and supported by a new underlying model. Amazon previously planned to launch a new version of its Alexa voice assistant, while Metis and Alexa will use the same infrastructure.
Over the past year, Amazon has been striving to showcase its momentum in generating artificial intelligence in Amazon's network services and overall business, attempting to refute people's perception of it falling behind in the AI technology competition. According to Business Insider, Amazon CEO Andy Jassy, who was directly involved in the "Metis" project, previously described a three-layer artificial intelligence strategy, which involves allowing customers to create new AI foundational models, helping them use existing foundational models, and building AI applications.
Lilly rose by 0.70%. Last Friday, Lilly released data on its weight loss and diabetes drugs (trade names: Mounjaro and Zepbound), which showed that the drug could reduce obstructive sleep apnea in obese patients. After the announcement, the stock prices of companies manufacturing sleep related disease devices plummeted on Monday. For example, ResMed, a manufacturer of CPAP devices, fell 11%, Inspire Medical Systems, a manufacturer of sleep apnea implant devices, fell 17%, and AdaptHealth, a home medical device supplier, fell 8.1%.
The latest achievement of Lilly Pharmaceuticals is hailed as a breakthrough experiment in the history of treating obesity and sleep apnea. Analysts say that as more data shows the widespread impact of weight loss drugs on obesity related diseases, medical device manufacturers are facing increasing pressure. The stock selling event was a repeat of last year's sharp drop in the share price of diabetes equipment manufacturers, when the market was worried that GLP-1 drugs would completely change the industry.
Tesla fell 0.23%. Since the beginning of this year, Tesla has launched large-scale layoffs in order to reduce costs. The number of employees has decreased from over 140000 at the end of last year to about 121000, a decrease of over 14%, which has exceeded the initial expectation of 10% layoffs. It is also Tesla's fifth large-scale layoff since 2017. In addition, Tesla's delivery volume and revenue both declined in the first quarter, with a significant decrease in net profit. Tesla is also exploring new growth opportunities, such as energy storage projects and robot mass production plans. CEO Musk has been quite optimistic about humanoid robots recently, stating that the annual production of related products may reach 1 billion units, while the annual production of Optimus Prime robots may reach about 100 million units.
Large bank stocks rose across the board. Goldman Sachs and Citigroup rose more than 2%, while Wells Fargo, BlackRock, Bank of America, JPMorgan Chase, and UBS Group rose more than 1%, and Morgan Stanley rose nearly 1%.
Energy stocks saw significant gains. US Energy and Imperial Oil rose by over 4%, Murphy Oil rose by 4%, Western Oil and ConocoPhillips rose by over 3%, ExxonMobil rose by nearly 3%, Chevron, Shell, and BP rose by over 2%, and Brazil Oil rose by over 1%.
Chevron rose 2.60%. Chevron announced on Monday that it expects upstream maintenance and shutdowns to affect production of 65000 barrels of oil equivalent per day in the second quarter. It is expected that downstream maintenance will cost $300 million to $400 million, mainly for the maintenance of refineries in California.
Most popular Chinese concept stocks rose, with the Nasdaq China Golden Dragon Index rising 1.30%. New Oriental rose more than 7%, Ideal Automobile and NIO rose more than 3%, Xiaopeng Automobile and Futu Holdings rose more than 2%, Tencent Music, NetEase, and Alibaba rose more than 1%, JD.com, Weibo, iQiyi, and Baidu rose slightly, while Manbang, Pinduoduo, and Bilibili fell more than 1%.