Tech Rebound Lifts Broader Market Indexes On Wall Street

Alexander Garcia
25 Jun, 2024
Miami

Investors returned to add tech stock exposure, driving the market indexes higher, and investors adjust allocations ahead to corporate quarterly results in two weeks. 

Major averages on Wall Street rebounded in Tuesday's trading a day after investors rotated out of semiconductor stocks into the energy and financial services sectors. 

The S&P 500 index and the Nasdaq Composite inched higher in early trading, and investors debated their corporate earnings outlook ahead of the end of the quarter this week. 

Tech stocks turned volatile after Nvidia dropped 6% in the previous session and extended the 3-day selloff to more than 13%.

However, some investors are still looking for the stock to reach as high as $155 and beyond, as the company's earnings continue to surge at a rapid pace as Microsoft, Meta, Google, and Amazon make multi-billion-dollar investments in artificial intelligence infrastructure. 

The Case-Shiller index, the controversial index tracking home prices in the 20 largest metropolitan areas, showed U.S. home price increase slowed to a 7.2% annual pace in April from 7.5% in March. 

S&P Global reported the update on the metropolitan home price index. 

Later in the week, investors are looking forward to the release of international trade balances, durable goods orders, and the third and final estimate for first quarter GDP growth.

Investors are also awaiting the release of consumer spending and income and the PCE price indicator for May, the preferred measure of inflation by the Fed’s policymakers.

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.2% to 5,451.35, and the Nasdaq Composite rose 1.1% to 17,687.46. 

The yield on 2-year Treasury notes edged lower to 4.74%, 10-year Treasury notes decreased to 4.25%, and 30-year Treasury bonds edged higher to 4.39%.

WTI crude oil decreased $0.56 to $81.08 a barrel, and natural gas prices fell 2 cents to $2.75 a thermal unit.

Gold decreased by $12.53 to $2,318.32 an ounce, and silver declined 63 cents to $28.18. 

The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 105.65.

 

U.S. Stock Movers

Pool Corp. declined 7.3% to $313.10 after the wholesale pool supply distributor lowered its full-year earnings outlook. 

Sea Limited decreased 2.8% to $73.75, and the Singapore-based online games developer was downgraded to "neutral" from "overweight" by J.P. Morgan. 

SolarEdge Technologies declined 15.8% to $28.07 after the company said it plans to raise $300 million through the sale of convertible notes expiring in 2029. 

Carnival Corp. rose 5.3% to $17.27 after the cruise line operator reported stronger-than-estimated second quarter results, and the company lifted its net yield and adjusted its net income outlook for the year. 

The largest cruise company also said bookings for 2025 are ahead of those for 2024. 

Nvidia rebounded 3% to $121.67 after falling more than 13% in the last three trading sessions and briefly surpassing Microsoft's market cap. 

In yesterday's trading, Nvidia declined more than 6%, its worst one-day decline since April, dragging down with it other semiconductor stocks and the Nasdaq Composite. 

Microsoft increased 0.2% to $448.52, and the European Commission, the executive arm of the European Union, said that the software company is "abusive" bundling its office productivity software, Office 365, with messaging and collaboration software, Team. 

 

European Markets Turn Lower Amid Rising Election Jitters In France and the UK 

European markets turned lower amid election anxieties and a weak economic outlook. 

Benchmark indexes in Paris and London traded down nearly 1% as the two European nations headed for elections. 

The U.K.'s Conservative Party is likely to suffer significant losses as voter sentiment swings in favor of the Labour Party after running the government since 2010. 

In France, the far-right and far-left parties are expected to make significant gains in the snap elections scheduled for June 30 and July 7, altering the balance of power in the legislative assembly. 

Prime Minister Emmanuel Macron confirmed in a letter to the French people that he plans to stay in office and complete his term until 2027, regardless of the election outcome. 

On the light day of economic news, Spain's statistical agency confirmed the economy expanded at a faster-than-estimated pace of 0.8% in the first quarter compared to the previous quarter. 

In the initial estimate, Spain's GDP growth was estimated to grow at a rate of 0.7%. 

 

Europe Indexes and Yields

The DAX index decreased by 0.8% to 18,177.62; the CAC-40 index fell by 0.6% to 7,662.43; and the FTSE 100 index fell by 0.4% to 8,247.79. 

The yield on 10-year German bonds edged lower to 2.38%. French bonds inched lower to 3.09%; the UK gilts edged lower to 4.05%; and Italian bonds increased to 3.90%.

The euro edged lower to $1.071; the British pound inched higher to $1.268; and the U.S. dollar advanced to 89.39 Swiss cents.

Brent crude decreased $0.84 to $85.17 a barrel, and the Dutch TTF natural gas fell by €0.7 to €34.52 per MWh.

 

Europe Stock Movers

Novo Nordisk added 2.1% to DKK 1,008.80, and the Danish pharmaceutical company said it plans to invest $4.1 billion, or 27 billion Danish kroner, to build a new manufacturing plant in Clayton, North Carolina. 

Airbus declined 12.3% to €130.44 after the aerospace company lowered its 2024 financial targets and announced a one-time charge of €900 million because of supply chain difficulties and unexpected costs in its space division. 

After the Airbus announcement, MTU Aerospace declined 3.5% to €216.80, and Rolls Royce fell 4.5% to 450.20 pence. 

Merck KGaA dropped 8.5% to €153.15 after the German pharmaceutical company canceled a late-stage trial for a cancer drug. 

Saga PLC jumped 1.6% to 114.70 pence after the cruise line operator focused on the 50-year-old and older age group of adults, saying revenue in the first four months to April was strong and met management expectations. 

 

The Yen's Decline Raises the Risk of Another Market Intervention 

The weakness in the yen supported the broader market advance for the second consecutive session on an improved profit outlook for the companies in the export sector. 

The Topix index soared nearly 2%, and the Nikkie 225 index advanced 1%. 

Investors also looked ahead to the release of retail sales, industrial output, and jobless rate data later in the busy week of economic updates. 

Market indexes in Tokyo have faced persistent selling pressure amid growing uncertainty about the Tokyo Stock Exchange's drive to convince its member companies to accelerate corporate governance reforms. 

Moreover, the persistent decline in the yen is also weighing on the market. While the cheaper yen is likely to boost the bottom line of exporting companies, in the long run, the yen's weakness is likely to fuel inflation and dampen consumer spending. 

The yen edged down to 159.43 against the U.S. dollar, the level that generally prompts the Bank of Japan to conduct market intervention. 

The yen drifted lower after the latest Bank of Japan's policy meeting minutes showed members are divided about the future course of the rate path. 

In addition, the Bank of Japan is committed to keeping purchasing Japanese government bonds at the current rate until the next meeting in July. 

About a month ago, the Bank of Japan spent near $62 billion on forcing the yen back to 153 after the currency dropped to 158, a three-decade low in late April. 

However, the central bank is not likely to conduct market intervention in the near future and may let the currency find its lower low, which could be around 163. 

 

Japan Stock Movers 

The Nikkei 225 stock average added 1% to 39,186.38, and the Topix index advanced 1.8% to 2,788.22. 

Automobile exporters were among the leading gainers after the yen approached a 34-year low. 

Toyota Motor, Nissan Motor, and Honda Motor advanced between 1% and 3%. 

Mitsubishi UFJ, Mizuho Financial, and Sumitomo Mitsui Financial gained between 1% and 5%. 

SoftBank, Advantest, Tokyo Electron, and Screen Holdings declined between a loss of 0.3% and a gain of 0.4%. 

 

Bargain Hunter Returned to China Markets with Modest Expectations 

Bargain hunters returned in search of attractive stocks after market indexes in Hong Kong and Shanghai declined for three days in a row. 

The CSI 300 and the Hang Seng indexes retained upward bias, and investors looked for bargains in the technology, banking, and real estate sectors. 

Investors have been on the defensive in the last two months amid a weak economic outlook and a lack of earnings visibility after indexes ran up in the first quarter. 

Moreover, market confidence has been waning after policymakers failed to announce substantial and deep reforms that could improve consumer and investor confidence. 

Foreign investors have been net sellers of Chinese stocks this month as investors lose confidence that Beijing policymakers have run out of options for reviving market confidence amid a fragile economic recovery and persistent real estate market decline. 

Investors are looking forward to the Communist Party's third plenum next week, but most investors are not hoping for concrete measures to be announced after the meeting. 

Chinese premier Li Qiang, in a speech delivered at an international forum in the northeast city of Dalian, reiterated the annual economic growth target of 5%. 

Premier Qiang also dismissed talks of industrial overcapacity and highlighted the risks of economic decoupling from the West. 

 

China Stock Movers 

The CSI 300 index decreased 0.2% to 3,471.75 and the Hang Seng Index rose 0.5% to 18,124.80. 

China Resources Land jumped 3.5% to HK$27.40, China Vanke jumped 2.2% to HK$4.97, and Longfor Group jumped 3.5% to HK$11.54. 

Li Auto edged up 0.7% to HK$70.50, BYD gained 1.3% to HK$240.60, and Xpeng added 0.6% to HK$30.60. 

Tencent Holdings jumped 0.4% to HK$382.0, Alibaba Group Holdings advanced 0.7% to $72.75, and Meituan jumped 2% to HK$117.80.