Market Watch: Nasdaq 100 Falls 1% as Nvidia Hit Before Earnings

Aug 26, 2024 thejournalbiz

Traders gearing up for Nvidia’s results, key inflation data.

Stock traders encouraged by prospects of Federal Reserve rate cuts sent tech megacaps sinking just days ahead of Nvidia Corp.’s results.

Tweet on the opening of the stock market

Market wraps: most shares in the S&P 500 gained, with Wall Street resuming a pattern of money rotating out of the safety of big tech, via Bloomberg#StockMarket #fintech #news pic.twitter.com/GohY9cdlBM

— The_Journalbiz (@the_journalbiz) August 26, 2024

Bloomberg chart

Monday’s action reprised a recent trend in which capitalization-weighted indexes underperformed the average stock due to weakness in the mega caps that dominate them. With firms such as Apple Inc. and Nvidia. each making up over 6.5% of the S&P 500, losses are hard to offset even when most of the index’s members are up.

“Powell sealed the deal for a September cut at Jackson Hole — leaving intact our thesis for continued broadening/rotation,” said Ohsung Kwon at Bank of America Corp. “But don’t sleep on Nvidia earnings, a consistent driver of S&P returns and still a risk to markets if they disappoint.”

Strong flows from corporate buybacks, systematic funds, and retail investors are expected to push stocks higher in the coming weeks, according to Goldman Sachs Group Inc.’s Scott Rubner.

He estimates there will be $17 billion of “unemotional demand between robots and corporates every day this week.” Rubner also sees a so-called “green sweep” for commodity trading advisers, or CTAs, over the coming week, which means those funds will likely be buying stocks however the market trades.