Tech sector biggest gainer as real estate lags
Tech was the biggest leader in Tuesday’s trading session, lifted by a rebound in shares of AI darling Nvidia (NVDA). The chip maker rose over 5% after a fall of over 6% on Monday.
The communications and services sector also saw a lift in the session while real estate served as the biggest laggard, dragged down by more disappointing housing data.
Home prices set a new record high in April, according to the S&P CoreLogic Case-Shiller report, although it wasn’t all doom and gloom as annual growth slowed from the previous month.
Overall, markets were mixed with a 1% jump in the Nasdaq Composite (^IXIC) competing against a 1% drop in the Dow Jones Industrial Average (^DJI). The S&P 500 (^GSPC) traded in positive territory, up about 0.1%.
Nvidia snaps 3-day losing streak
Nvidia stock (NVDA) climbed about 5% on Tuesday, reversing a three-day slide that erased roughly $430 billion of the AI chip giant’s market cap.
It was a stark fall from grace for the stock, which hit a record close exactly one week ago when it briefly surpassed Microsoft (MSFT) as the most valuable company in the world.
Yahoo Finance’s Ines Ferré has more:
“I think it’s way overblown,” Kenny Polcari, managing partner at Kace Capital Advisors, said of the sell-off. “I don’t think people should be nervous about what’s happening with Nvidia.”
“I would use this weakness as an opportunity,” he added, noting the timing of the decline.
“We’re at the end of the quarter, so it’s a quarter-marking period. You’ve got a lot of big assets that are trying to reshuffle and rebalance,” he said.
Polcari added he wouldn’t be surprised if the stock slid “another 5% or 8%.”
On Tuesday, Nvidia’s market cap climbed back to hover around the $3 trillion market cap, though it was still below the valuations of Microsoft or Apple (AAPL).
Nvidia has played a pivotal role in buoying the S&P 500 (^GSPC) and the Nasdaq (^IXIC) to repeated record highs in 2024. The Santa Clara, Calif.-based company completed a 10-for-1 stock split on June 10.
Bitcoin pries back above $60K
Bitcoin (BTC-USD) prices are regaining some strength after prices dipped below $60,000 on Monday — their lowest level since early May.
The cryptocurrency saw prices rebound about 1% to trade above $61,650 a coin in late morning trading on Tuesday. Other cryptos like Ethereum (ETH-USD) also rose following Bitcoin’s positive moves.
Bitcoin is down about 12% over the past three months but is still up more than 45% on the year, buoyed by recent SEC approvals of spot bitcoin ETFs.
Consumer confidence dips slightly in June
Consumer confidence declined slightly in June, putting a halt to any signs of a rebound.
The latest index reading from the Conference Board was 100, below the 101.3 seen in May and in line with the 100 economists surveyed by Bloomberg had expected.
“Confidence pulled back in June but remained within the same narrow range that’s held throughout the past two years, as strength in current labor market views continued to outweigh concerns about the future. However, if material weaknesses in the labor market appear, Confidence could weaken as the year progresses,” said Dana M. Peterson, chief economist at The Conference Board.
Peterson added, “Consumers expressed mixed feelings this month: their view of the present situation improved slightly overall, driven by an uptick in sentiment about the current labor market, but their assessment of current business conditions cooled.”
Opening bell: Nasdaq jumps, Dow slips
US stocks opened mixed on Tuesday as AI chipmaker Nvidia (NVDA) eyed a cautious comeback from a three-day skid, rising more than 0.2% in early trading.
The tech-heavy Nasdaq Composite (^IXIC) moved up roughly 0.5%, while the benchmark S&P 500 (^GSPC) rose 0.2%. The Dow Jones Industrial Average (^DJI) remained the only major index in the red, slipping about 0.2% after surging over 200 points to start the week.
Home prices hit new record in April
Home prices set a new record high in April as the market remains tight. But annual growth slowed from the previous month.
Home prices in the 20 largest US metros increased 7.2% in the last 12 months ending in April, lower than the 7.5% annual gain in the previous month, according to the S&P CoreLogic Case-Shiller. On a monthly basis, home prices across the 20 biggest cities increased 0.4% in April compared to the previous month.
Low inventory, high mortgage rates, and record home prices have put the housing market out or reach for many would-be buyers. Economists at Bank of America believe that housing hurdles aren’t going away anytime soon.
“The US housing market is stuck, and we are not convinced it will become unstuck anytime soon,” Michael Gapen, an economist at Bank of America, wrote in a note to clients on Monday.
“To this point, the investment bank believes that the pandemic housing shocks still have to pass through the market. Bank of America expects home prices to rise by about 4.5% this year and 5.0% next year, but then fall back to 0.5% in 2026.
1 key market risk for 2025
As if you need another money thing to worry about.
In an exclusive interview with Yahoo Finance’s Jennifer Schonberger late Monday, US Treasury Secretary Janet Yellen reminded investors that the Trump tax cuts are set to expire in 2025.
I can’t think of the last investor I talked to who expressed a concern about the expiration and how it may impact markets.
But Yellen did her best job to bring this back into the light:
“The signature policy from the Trump years was the Tax Cut and Jobs Act, and it promised an investment boom which really did not materialize. It gave huge tax breaks to corporations and to wealthy individuals. And it resulted in an enormous increase in the deficit and lowered tax revenues below historic norms. And I think it’s responsible for many of the problems that we face now with our fiscal trajectory. And so that would concern me to leave all of that in place.”
How the markets will react in 2025 should the tax cuts not get extended due to deficit concerns is, of course, wildly unknown today. It shouldn’t be ignored in your investment planning process, however. Consider this alone: No tax cut extension would mean the top tax rate would return to 39.6% from 37%.
That’s real money for real people.
A helpful reminder on Nvidia
While everyone appears to now be an Nvidia (NVDA) expert and is out there waxing poetic on the stock’s recent abrupt slide, I will not go that route this morning.
Instead, I wanted to serve up some factual numbers with the help of BTIG’s technical analyst Jonathan Krinsky. They provide nice context on why Nvidia shares are taking a little pause.
Here’s what Krinsky has to say, as if to remind the masses that stocks don’t go up every single day.
“NVDA recently traded ~100% above its 200 day moving average. Since 1990, the widest spread that any U.S. company has ever traded above its 200 day moving average while it was the largest company was 80% by Cisco (CSCO) in March 2000, which marked its all-time high. In other words, NVDA is in a league of its own. It’s also notable that at last week’s peak, NVDA surpassed Microsoft (MSFT) briefly as the largest U.S. company. On March 24, 2000, CSCO surpassed MSFT briefly to also become the largest market cap company, and that marked the peak of both CSCO and the Nasdaq to the day. While we fully recognize the fundamentals are much different this time around, in the last five years, NVDA is +4,280% compared to CSCO’s +4,460% gain in the five years leading up to its peak. Over the last 18 months, NVDA is +827% which is actually double that of CSCO’s 18-month gain into ’00.”
