Stocks edged lower on Monday, again hit by a drop in tech stocks as Wall Street awaited key reports this week, including Nvidia’s earnings and September employment report.
The Dow Jones Industrial Average lost 702 points, or 1.5%, as declines in artificial intelligence chip darlings, along with Salesforce and Apple, dragged down the index of blue-chip companies. The S&P 500 sank 1.4%, while the Nasdaq Composite fell 1.5%.
Nvidia fell about 3% ahead of the company’s third-quarter results, which are scheduled to be released on Wednesday. The chipmaker and other names in the artificial intelligence industry have been the source of recent pressure as investors grow concerned about strained valuations, SEEbiz reports. Blue Owl Capital, a private equity lender, fell 7% amid concerns over large lending related to the construction of an artificial intelligence data center.
“On the one hand, it will be important for Nvidia to confirm that the demand is still there, that they don’t see a slowdown,” said Baird investment strategist Ross Mayfield. “But if they don’t take it a step further, I think it’s just going to leave the other question more open, which is, ‘We know there’s a demand for computing, [pa] as it is [povrat ulaganja] for the companies that buy all these chips?’”
“If they offer any even slightly muted guidance or demand forecasts for their chips, it would be poorly received by the market,” he added.
After Nvidia, Walmart will report before the market opens on Thursday, and those results could offer insight into how exhausted the consumer is and show whether spending is split, the strategist said.
“Consumer stocks, especially in the absence of some of this labor market data, will be super, super important to how the market feels about the upcoming holiday season,” he continued.
Investors will also be watching Thursday’s September non-farm payrolls data, the first to be released after a blackout of economic data due to the US government shutdown. The report, as well as this week’s release of minutes from the Federal Reserve’s October meeting — even if a bit “stale” — could offer some clarity at a time when the market is “still in a data vacuum for the next few weeks as the government gets back to normal,” Mayfield noted.
The market has cut its expectations that the Fed will cut its overnight benchmark interest rate by a quarter of a percentage point at its last meeting of the year next month. Fed funds futures traders are currently predicting a roughly 40% chance of a cut, down significantly from the more than 90% chance predicted a month ago, according to CME’s FedWatch tool.
Alphabet was the bright spot on Monday, rising nearly 3% after Warren Buffett’s Berkshire Hathaway revealed it had taken a stake in the parent company of Google and YouTube. Investors were encouraged that Berkshire is still finding value in the name of artificial intelligence after a big surge this year, although Buffett himself was probably not directly responsible for the purchase, but rather his two stock managers.
In contrast, bitcoin continued to post losses, falling more than 3% after the cryptocurrency fell below the $95,000 level on Friday. The decline serves as a sign that risk appetite and investor sentiment in the technology industry may be weakening.
With daily moves, the S&P 500 is now down nearly 3% in November after six straight months of gains.
