(Bloomberg) -- Big tech fell in late trading after Nvidia Corp.’s sales forecast disappointed some investors hoping for more after the billions spent in the revolutionary artificial intelligence technology.
A US$286 billion exchange-traded fund tracking the Nasdaq 100 (QQQ) lost 0.6% while Nvidia sank 5% after the close of regular trading. Third-quarter revenue will be about$32.5 billion, the company said Wednesday. Though analysts had predicted $31.9 billion on average, some estimates ranged as high as $37.9 billion. Sales in the fiscal second quarter, which ran through July, topped analysts’ projections.
A renewed bout of volatility gripped stocks in the run-up to the highly anticipated results from the chipmaker — the last of the “Magnificent Seven” mega caps to report. The S&P 500 — at one point — headed toward its worst drop since the Aug. 5 meltdown. The gauge pushed away from that threshold, closing down 0.6%. The Nasdaq 100 slid 1.2%. Wall Street’s favorite volatility gauge — the VIX — surged to around 17.
Treasury 10-year yields rose two basis points to 3.84%.Bitcoindipped below$60,000.
To Matt Maley at Miller Tabak, while it’s been a “pretty uneventful week” so far, the odds are good that we’ll see some significant movement one way or the other after Nvidia reports.
“The activity should at least pick up,” Maley said.
Future gains in global tech stocks should be more gradual after the quick rebound over the past three weeks, with potential headwinds from U.S. macroeconomic data and further news on semiconductor export controls likely contributing to rising volatility, according to Solita Marcelli at UBS Global Wealth Management
“However, we continue to hold a positive structural view on the broader AI theme, and see ways investors can manage their exposure to the technology that we think is set to drive growth in the years to come,” she noted.
The correlation between the S&P 500 and Nvidia has fallen as the stock’s effect on index earnings growth is fading, according to Bloomberg Intelligence’s strategists led by Gina Martin Adams.
“AI themes are still drawing significant attention, yet the dominance is likely to decrease as other sectors and themes attract mind and fundamental share,” they wrote.
The S&P 500 companies outside the “Magnificent Seven” cohort more than doubled growth expectations to 9.2% compared with the forecasted 4%, BI said. Three of the 11sectors — including industrials, real estate and staples — saw growth insteadof declines. Energy was the only sector to fall short.
Corporate Highlights:
·Kohl’s Corp. raised its full-year profit outlook as the retailer trims expenses and reduces inventory levels amid a pullback from consumers.
·Abercrombie & Fitch Co. beat analysts’ sales expectations for the sixth consecutive quarter, but it wasn’t enough to impress investors who have grown accustomed to the ’90s fashion comeback.
·Foot Locker Inc.’s sales surpassed analysts’ expectations turnaround efforts and a rekindled relationship with key partner Nike Inc. begin to pay off, but investors remain unimpressed by the progress.
·Nordstrom Inc. offered a rosier view for the current year’s sales following better-than-expected results at its discount chain.
·United Airlines Holdings Inc. flight attendants voted to give union leaders the authority to call a strike, if one is eventually allowed by U.S. labor mediators.
·Warren Buffett sold an additional$982 million of Bank of America Corp. stock as his conglomerate continues to shrink its investment in the second-largest U.S. bank.
·B. Riley Financial Inc.’s lenders have granted the embattled firm more time to produce an overdue financial report as it looks for ways to ease its debt load of more than $2 billion.
·Super Micro Computer Inc. tumbled 19%after saying it will delay filing its annual financial disclosures.
Key events this week:
·Eurozone consumer confidence,Thursday
·U.S. GDP, initial jobless claims,Thursday
·Fed’s Raphael Bostic speaks, Thursday
·Japan unemployment, Tokyo CPI,industrial production, retail sales, Friday
·Eurozone CPI, unemployment, Friday
·U.S. personal income, spending, PCE;consumer sentiment, Friday
Some of the mainmoves in markets:
Stocks
·The S&P 500 fell 0.6% as of 4p.m. New York time
·The Nasdaq 100 fell 1.2%
·The Dow Jones Industrial Average fell0.4%
·The MSCI World Index fell 0.5%
·Bloomberg Magnificent 7 Total ReturnIndex fell 1.2%
·The Russell 2000 Index fell 0.7%
Currencies
·The Bloomberg Dollar Spot Index rose0.3%
·The euro fell 0.6% to $1.1113
·The British pound fell 0.6% to$1.3184
·The Japanese yen fell 0.5% to 144.72per dollar
Cryptocurrencies
·Bitcoin fell 4.7% to $58,959.11
·Ether fell 2.8% to $2,509.03
Bonds
·The yield on 10-year Treasuriesadvanced two basis points to 3.84%
·Germany’s 10-year yield declinedthree basis points to 2.26%
·Britain’s 10-year yield was littlechanged at 4.00%
Commodities
·West Texas Intermediate crude fell 1%to $74.74 a barrel
·Spot gold fell 0.7% to $2,507.78 anounce
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