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Nasdaq Sets for Gains as Nvidia Turns a Corner
U.S. stock futures were roughly flat Tuesday with AI chipmaker Nvidia (NVDA) aiming for a cautious return of a three-day skid as investors prepared their portfolios for the end of the quarter.
Futures on the tech-heavy Nasdaq 100 (QN=F) rose about 0.5%, while those in the benchmark S&P 500 index (ES=F) rose 0.2%. Dow Jones Industrial Average Futures (YM=F) fell 0.1% after rising more than 200 points at the start of the week.
Stocks look brighter after the Nasdaq and S&P 500 suffered bruises as Nvidia’s fall affected the tech rally that boosted gains this year. Investors are seen as making profits scored on names linked to AI as a stellar quarter draws to a close, raising the question of whether recent losses still lie ahead.
Shares of the AI darling rose more than 2% in premarket trading, coming off a more than 6% drop on Monday.
At the same time, the Dow appears to be recovering amid the shift from technology stocks to value stocks, lending weight to the idea of gains extending to other sectors.
Elsewhere, Friday’s update of the Personal Consumption Expenditures (PCE) index, a favorable inflation figure for the Federal Reserve, is awaited. Governor Michelle Bowman emphasized Tuesday that she is willing to raise interest rates if keeping them stable fails to control price pressures.
Meanwhile, there’s the Case-Shiller report on April home prices and a reading on consumer confidence, closely monitored by investors looking for holes in past resilience.
Live updates2
- Tuesday, June 25, 2024 at 12:40 GMT+2
An important market risk for 2025
As if you needed another financial thing to worry about.
On a exclusive interview with Yahoo Finance Jennifer Schonberger On Monday night, US Treasury Secretary Janet Yellen reminded investors that Trump’s tax cuts will expire in 2025.
I can’t think of the last investor I spoke to who expressed concern about the expiration and how it might impact the markets.
But Yellen did her best to bring this back to light:
“The signature policy of the Trump years was the Tax Cuts and Jobs Act, and it promised an investment boom that didn’t actually materialize. It gave huge tax breaks to corporations and wealthy individuals. And it resulted in a huge increase in the deficit. and it has reduced tax revenues below historical norms and I think that is responsible for many of the problems we face now with our fiscal trajectory.
How markets will react in 2025, if tax cuts are not extended due to deficit concerns, is, of course, completely unknown today. However, this should not be ignored in your investment planning process. Let’s consider this by itself: no extension of the tax cut would mean that the top tax rate would return from 37% to 39.6%.
This is real money for real people.
You can watch Jenn full interview with Treasury Secretary Janet Yellen below.
A useful reminder about Nvidia
Although they all now appear to be Nvidia (NVDA) expert and is waxing poetic about the stock’s recent precipitous drop, I won’t be going down that path this morning.
Instead, I wanted to present some factual numbers with the help of BTIG technical analyst Jonathan Krinsky. They provide good context as to why Nvidia stock is taking a short break.
Here’s what Krinsky had to say, as if to remind the masses that stocks don’t go up every day.
“NVDA recently traded about 100% above its 200-day moving average. Since 1990, the widest spread 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 company in the US. On March 24, 2000, CSCO briefly surpassed MSFT to also become the company with the largest market capitalization, and this marked the peak of CSCO and Nasdaq to that day. While we fully recognize that the fundamentals are very different this time around, over the past five years NVDA has been +4,280% compared to CSCO’s +4,460% gain in the five years leading up to its peak. Over the past 18 months, NVDA has been +827%, which is actually double CSCO’s 18-month gain in 2000.”
