[US Market Conditions]Selling on large tech stocks, pending Nvidia earnings results – dollar near 150 yen – Bloomberg

133

Large-cap tech stocks sold off on the New York Stock Exchange, pushing the S&P 500 index off its all-time high hit last week. We are waiting for the announcement on the 21st to see if the company’s financial results will support the record rise in semiconductor giant Nvidia’s stock, which was sparked by the artificial intelligence (AI) boom.

Stock closing price change from previous business day S&P 500 stock index 4975.51-30.06-0.60% Dow Jones Industrial Average 38563.80-64.19-0.17% Nasdaq Composite Index 15630.78-144.87-0.92%

Traders wait for Nvidia’s financial results announcement

Photographer: I-Hwa Cheng/Bloomberg

So far this earnings season has been filled with bulls’ hopes that the corporate economy is doing well, but the results of the seven largest high-tech companies, known as the “Magnificent Seven”, have been mixed. Some traders are taking profits ahead of Nvidia’s earnings announcement on the 21st. Reports that Microsoft is developing a network to replace the one made by Nvidia are also a source of concern.

For Nvidia, which is at the center of the AI ​​revolution, the hurdles are extremely high. Its stock price has more than tripled in the last year, and it has remained a top performer on the S&P 500 since the beginning of this year. Susquehanna expects a surge in demand for its data center business to boost Nvidia’s sales. Companies such as Meta Platforms and Tesla are strengthening their graphics processing businesses, and demand for AI is expected to remain strong.

Matt Maley, chief market strategist at Miller Tabak, said he expects Nvidia’s results to show reasonably good performance and outlook, but he cautions investors that the stock price will not necessarily respond to strong results. points out that this should be kept in mind.

“Expectations can be so high that the reaction is ‘sell it on the news,'” Maley said. “We don’t know what the reaction will be this week, so I wouldn’t be surprised if we take a wait-and-see approach until the announcement is made on the evening of the 21st,” he said.

Nvidia stock fell more than 4% on the day. The tech-heavy Nasdaq 100 index fell nearly 1%. The S&P 500 stock index closed below 5,000. The Philadelphia Semiconductor Stock Index fell 1.6%.

Stock price trends of Apple, Amazon, Microsoft, Alphabet, and Nvidia (starting from the end of 2023)

Source: Bloomberg

Louis Navellier of Navellier & Associates pointed out, “AI-related stocks, which have been flying well, have seen a significant correction on this day.” “Although this adjustment may have come too late, the AI ​​myth has not collapsed at all. Still, this day must be a day of defense.”

The enthusiasm for AI has led to a rise in related stocks, but only a few, including Nvidia, have seen AI lead to significant revenue increases.

The company’s market capitalization has ballooned to about $1.7 trillion, briefly surpassing Amazon.com and Alphabet. All the big tech companies are generally doing well this year, but they all pale in comparison to Nvidia.

Daniel Ives, an analyst at Wedbush Securities, points out that 2023 marks the first year of technological change since the early days of the internet in the 1990s. However, he said, “Investors must confirm that the company is strengthening its capital spending and has a future growth path that justifies the current valuation.”

Matthew Weller, global head of research at Forex.com, says investors will focus less on Nvidia’s financial results and more on how CEO Jensen Huang views demand trends for the rest of the year. he points out.

“Any indication that the AI ​​boom may be slowing could send the stock market into a bearish turn, so it makes sense that traders would be reluctant to move ahead of the announcement.”

Even including today’s decline, the S&P 500 is up about 4% since the beginning of the year. The outlook is buoyed by optimism about AI and signs that the U.S. economy is resilient.

UBS Group has raised its year-end forecast for the S&P 500 stock index. This is the second time this year that the outlook has been raised, which was announced in December last year. “It appears our bullish outlook was not bullish enough,” firm strategists wrote in a note to clients. Goldman Sachs Group also recently raised its forecast for 2024 for the second time in just a few months.

Among individual stocks, Walmart rose. The company announced that it has agreed to acquire US smart TV maker Vizio Holdings. The acquisition price is approximately $2.3 billion (approximately 345 billion yen). Home Depot’s quarterly results show that sales have declined for five consecutive quarters. The decline in demand for home renovations and remodeling was once again demonstrated. The Biden administration is negotiating to grant Intel more than $10 billion in subsidies.

national debt

In the US bond market, short-term bonds are performing relatively well. Inheriting the trend of British bonds, the yield curve has become steeper.

Japanese government bond price change from previous business day (bp) US 30-year bond yield 4.44% 0.70.15% US 10-year bond yield 4.27%-0.8-0.18% US 2-year bond yield 4.61%-3.0-0.64% US Eastern Time 16:47

In addition to European bonds, Canadian government bonds also outperformed U.S. bonds following January’s consumer price index (CPI). Corporate bond issuance was also heavy on the day, with nine issuers totaling more than $14 billion in debt, putting further pressure on the U.S. Treasury yield curve. Hedges against even larger Treasury sales continue to emerge in the options market.

Volume as of 3:00 p.m. New York time was 77% of the 20-day average. Secured overnight funding rate (SOFR) futures were also trading thinner than usual.

money order

The dollar in the foreign exchange market has fallen. The level was lowered as US bond yields fell. Selling in US high-tech stocks ahead of Nvidia’s financial results also had an impact. The Canadian dollar fell after inflation slowed more than expected in January.

Exchange Rate Last Business Day Change Rate Bloomberg Dollar Index 1242.68-1.19-0.10% USD/JPY ¥150.02-¥0.11-0.07% EUR/USD $1.0807$0.00280.26% 16:47 ET

The Bloomberg Dollar Spot Index, which measures the dollar’s movements against 10 major currencies, at one point fell 0.3%. Among the 10 major currencies, the Swedish krona led the rise.

The dollar index’s one-month risk reversal signals the first dollar-bearish sentiment since January 2nd.

The dollar rose 0.2% against the yen to 150.44 yen during Asian time, but fell by New York time. The one-month risk reversal covered by the Bank of Japan’s March policy meeting has expanded to a 1% dollar putover.

crude

New York crude oil prices have fallen. Although there are signs of tightening supply and demand in the spot market, investor sentiment has generally deteriorated due to concerns about prolonged high interest rates.

Amid a lack of clear information regarding supply and demand, crude oil prices have followed the movements of the financial market as a whole.

Although the price fell on the day, the market is currently hovering near the upper end of the range since early November last year. In addition to the tense situation in the Middle East, there are bullish factors such as voluntary production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and OPEC+, which is made up of non-member oil producing countries, and weak factors such as sluggish consumption by China, the largest crude oil importing country. There is a tug-of-war between materials.

“The market is in wait-and-see mode right now,” said Rob Thamel, senior portfolio manager at Tortoise Capital Advisors. “The next thing to watch is what OPEC+ decides at its next meeting,” he said.

WTI crude oil first product

Source: NYMEX

OPEC+ will decide in early March whether to continue the current coordinated production cuts into the second quarter (April-June). According to a report compiled by OPEC, Iraq, OPEC’s second largest producer, was producing more crude oil than its quota. Iraqi Oil Minister Abdul Ghani said in an interview in Cairo on the 19th that he intends to improve compliance once an external review of production estimates is completed.

Meanwhile, tensions continue in the Red Sea. On the night of the 19th, for the first time since Yemen’s pro-Iranian Houthi group began targeting commercial ships, crew members were forced to abandon their ships and evacuate after being attacked.

On the New York Mercantile Exchange (NYMEX), the March West Texas Intermediate (WTI) futures contract expiring on this day closed at $78.18 per barrel, down $1.01 (1.3%) from the previous business day. The April contract, the main contract, fell 1.8% to $77.04. The April North Sea Brent contract on London ICE fell $1.22, or 1.5%, to $82.34.

Money

Gold prices rose for the fourth consecutive day. Attention is focused on the statements of US financial officials and the minutes of the US Federal Open Market Committee (FOMC) in order to obtain clues about the future direction of US interest rates.

On the 21st, the FOMC minutes for the January 30-31 meeting will be published. U.S. Federal Reserve Board Director John Waller will speak on the 22nd, and several financial officials are scheduled to speak this week.

gold spot price

Source: Bloomberg

Daniel Galli, a commodity analyst at TD Securities, said trend-following investors are already buying gold on expectations of a U.S. interest rate cut cycle. If the gold price breaks above $2,035 per ounce, there will be mild buying, and if it breaks above $2,055, there is a possibility of large-scale buying.

As of 2:40 pm New York time, the gold spot price was $2,027.01 per ounce, up $9.80 (0.5%) from the previous business day. New York Mercantile Exchange (COMEX) gold futures for April contract rose $15.70, or 0.8%, to close at $2,039.80.

Original title:Stocks Fall Before Nvidia’s Make-or-Break Moment: Markets Wrap(excerpt)

Treasuries Twist Steeper as Front End Gains; USD IG Slate Active（抜粋）

Dollar Slips With Treasury Yields, Tech Shares: Inside G-10（抜粋）

Oil Falls as Monetary Policy Uncertainty Outweighs Tight Market(Excerpt) (Excerpt)

Gold Rises for Fourth Day as Traders Await Fedspeak, Minutes（抜粋）