Nvidia's influence and economic indicators shape investor sentiment

Company News

by Glenn Dyer

Nvidia dragged Wall Street markets lower on Friday, but they still ended the week higher, albeit a bit stretched.

The coming week wraps up the second quarter and the month of June in terms of performance and gains (and losses), with bragging rights for the biggest company depending on how Nvidia, Microsoft, and Apple shares perform this week.

Nvidia is suddenly looking vulnerable. The AI chip hot stock had its first losing week in nine, with a loss of 3.2% on Friday and 2.5% for the week.

It is still up 163% year to date, but last week’s trading has made some investors nervous about a peak for Nvidia for the time being.

After topping the all-time valuable list with a $3.3 trillion valuation last week and a brief reign as the world's most valuable company, its stock has fallen 9.6%.

In market value terms, the drop in value is four times the market cap of General Motors!

The S&P 500 slipped 0.16% but remained close to its all-time high set on Tuesday and capped its eighth winning week in the last nine. The Dow edged up by 15 points, or less than 0.1%, while the Nasdaq Composite dropped 0.18%.

For the week, the Dow had its best performance since May, with a gain of 1.45%. The S&P 500 was up 0.6% (it was a holiday-interrupted week of only four sessions), while the Nasdaq ended the week flat, thanks to the sluggish performance by Nvidia.

Investors said that apart from Nvidia and other AI chip stocks and techs like Microsoft, the rest of Wall Street was quiet. The holiday on Wednesday helped, as did the heatwave across much of the country during the week and into this weekend (but not along the Gulf Coast, where a tropical storm dropped a lot of water).

“It’s probably not a bad time to take some chips off the table,” Dave Grecsek, a managing director at Aspiriant, told CNBC. “We’ve had a magnificent run, and the market is looking a little extended.”

The total US market saw its highest trading volume on Friday since March 15, due to the triple witching—that is, the expiration of stock options, stock index options, and stock index futures options.

In the 'mine is higher than yours' brag for market value, Microsoft won for another week with a value of $3.34 trillion, up 2.55%. Apple held onto second place with $3.18 trillion and a loss of 1.04%, while Nvidia slid to $3.11 trillion with its 2.5% loss for the week.

“Technology stocks continue to be in the spotlight,” Emily Roland, co-chief investment strategist at John Hancock Investment Management, told CNBC. “I can’t remember a time when one single stock has been so influential on the market, and that’s really been a key driver of the market action as of late.”

The yield on the US 10-year Treasury edged down to 4.25% from 4.26% late Thursday. The yield on the two-year Treasury, which more closely tracks expectations for Fed action, dipped to 4.73% from 4.74%.

Shares of Trump Media & Technology Group rallied back from an early loss and rose 3.4% to trim its loss for the week to 28% after shareholders with shares in the float were allowed to trade them.

First, they have to pay for the shares, and the company thinks around $70 million will flow to it from shareholders exercising their warrants.

Attention this week turns to US inflation with the release Friday of the PCE income, spending, and prices data that the Fed watches more closely than any other indicator, especially the core reading on prices.

A weak reading from this key report could be enough to send share prices off for a break for the rest of summer and into the northern autumn, especially if the reading is enough to cast more doubt on a rate cut.

Before that is the final estimate of first-quarter growth for the US economy—any advance on 1.3%?

Eurozone shares rose 1.1%, recovering some of their losses from the week before as fears around the French election settled down a bit. But they will rise later this week as the first-round poll approaches.

However, Japanese shares fell 0.6%, and Chinese shares fell 1.3% on unimpressive economic data for May and more bad news about property.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

Subscribe to our Daily Newsletter?

Would you like to receive our daily news to your inbox?