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Nvidia down for third day, Arm joins Nasdaq 100: Market Domination Overtime

The Nasdaq Composite (^IXIC) fell by over 190 points — or almost 1.10% — in Monday's trading, as the Dow Jones Industrial Average (^DJI) leaped ahead 260 points in the session. Nvidia (NVDA) continued to fall for its third session in a row, bringing the S&P 500 (^GSPC) dow along with it.

In this episode of Market Domination Overtime, Hosts Julie Hyman and Josh Lipton speak with Invesco Global Market Strategist Brian Levitt about how the market can keep rallying despite Nvidia's downturn.

Arm Holdings (ARM) was added to the Nasdaq 100 (^NDX) on Monday as shares are up nearly 140% since its public debut in September 2023. Arm CEO Rene Haas joins the show to discuss this milestone and the British semiconductor company's outlook.

For more expert insight and the latest market action, click here.

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This post was written by Nicholas Jacobino.

Video transcript

There's the closing bell on Wall Street and now it's market domination over time.

We are joined by Jared to get up to speed on the action from today's session.

Let's start with where we end.

That is where the major averages close the session here.

We've got the dow up by about 260 points or so, about two thirds of 1%.

But we see a big divergence again today, we talked about it earlier here.

So we continue to see some weakness in tech.

That's why the dow here is outperforming.

It's not as heavily weighted in that direction.

We've got the S and P 500 down a third of 1% the NASDAQ down by much more 1% in part because of what's going on with NVIDIA.

And then as lately as we've been checking on that S and P equal weight index, it too is outperforming by a pretty broad margin today, which gives creedence again to this argument that perhaps the rally that we are seeing is broadening.

Although the S and P 500 itself, it's not higher today.

The Russell 2000 also higher in today's session that prompts me to take a little stroll on down here to the 10 year where we continue to see it around 4.25%.

Remember, the conventional wisdom has been that the small caps will really be able to start to take off in a more decided fashion when rates come down, Jared, you've got a closer look at today.

Yes.

Well, another day of divergence between the NASDAQ and the dow, as we've been talking about it, kind of been a theme for the last few weeks, but let's check out the sector action today.

And here we have energy up 2.53% that is in the leading spot followed by utilities with about half those returns then staples.

So kind of a a defensive sector to the bish action today and what did not work well, tech XL down 2.44% and then consumer discretionary, which also houses Amazon and Tesla.

And you can really see what's at work here when you look inside the NASDAQ 100 full of those techy growth names.

You're seeing a lot of underperformance today, especially in the chip space.

So let me just switch over to our semiconductors heat map where we see NVIDIA down over 6.5% Taiwan semi down 3.5.

So is broad as Ml Qualcomm down 5.5%.

So this also happens on a day when XLK.

This is the first day of rebalance that happened after the close on Friday when all those $10 billion of Apple shares were sold, $10 billion of NVIDIA or thereabouts were bought.

And the net result is, and that could have happened over a week.

But the net result is we're seeing stuff down today.

Now here, the leaders and in the first spot, we have cannabis, that's the MJ harvest ETF, then we have small oil, then we have regional banks.

So uh some interesting stuff they're going on at the top also.

So also biotech up about 2% to the downside.

I'm gonna leave you guys with the crypto board.

There's another area where we're seeing a lot of losses that are pretty heavy.

Bitcoin down 7% guys, Jared.

Thank you, appreciate markets, finishing the day mix with the dow hitting its fifth consecutive session of gains here to help us break down all of today's market action is Brian Levitt, global Market strategist at Invest Brian.

It is good to see you and I want to start on, on one topic, Brian, that's certainly getting a lot of attention with which is NVIDIA.

Uh We just take a breather here, Brian and you know, I think a lot of investors are just wondering, you know, can the market keep rallying Brian when you have a giant like NVIDIA hitting the pause button here?

What do you think?

Yeah, I think the pause button is a reasonable word.

For that.

Let's remember, we've seen an unbelievable advance in that name.

I mean, the irony is that when NVIDIA was leading or a handful of names were leading people were bemoaning that too.

Wishing to see, hoping to see a broadening out.

So if we do continue to see this broadening out in the market, um that's actually a healthier environment, that's a, that's a better backdrop.

So, um you know, I, I believe that if the, if the Federal Reserve can successfully normalize the yield curve without, you know, any type of recession in the United States, which isn't in, doesn't appear to be in the cards.

That should be a good backdrop for risk assets even if um a couple of names at the top, um which move substantially need to cool off a little bit here.

I mean, Brian, that said there has been a little bit more noise being made by folks who watch the fed, that the risks now are more weighted to them acting too late and that the risks of a potential recession are rising.

How worried are you about that?

Well, I'm not overly worried about the risks of recession.

I mean, when I look at the indicators that would suggest to me if we're, if we're having a recession, I would expect to see corporate bonds spreads or yields relative to the risk free rate blowing out banks, tightening lending standards significantly.

So we're not seeing that we're just seeing signs of slowdown in the real economic debt.

Um but I do agree that the risk is to growth not to inflation.

I mean that story, the inflation story is passe at this point.

And so yeah, I would like to see the federal Reserve starts.

I believe that 525 to 550 fed funds range in a world where their preferred measure of inflation is at 275.

Well, that's just too tight and it, it's time to start, uh, bringing those rates down again.

I've told people before, they don't answer my phone calls, but I certainly expect to start seeing that, um, as we move towards the end of this year into next year.

And Brian, what, what if they don't ease though?

Would that change your view of the market and, and where we're headed in 2024?

No, I don't think that, you know, not, certainly not in the near term.

Um, I think the Federal Reserve, you know, to me, whether it's September or December is, is largely immaterial, it's more that the easing cycle is commencing now.

Uh, the, the longer I suppose, the longer they wait, the, the risk to the economy is larger, but the good news is, there's not a lot of leverage and a lot of excess in this economy.

So, even though we've been inverted now on the yield curve some 1920 months, the economy has been able to be resilient through that again, because it's not a classic cycle.

We don't have a lot of leverage.

We don't have a lot of excess.

So I don't think that, you know, the fed, whether they do it one month versus the other month is necessarily the, the big risk.

Um, it's more that if they just misinterpret this environment and stay on hold, you know, indefinitely economy, slowing, it could likely use a little bit of help here.

Um Besides the fed, the other big thing that we're watching Washington related is of course, the presidential election, we've got a debate coming this week.

We are gonna be hearing from the Treasury Secretary Janet Yellen here on Yahoo Finance in just a few.

And obviously there's a lot of sick economically in terms of economic policy.

What are you focusing on on that front when it comes to the election?

Well, one of the things I'm trying to do is calm people's concerns about it.

Um You know, people tend to get very worried that something's going to happen in an election environment that is going to meaningfully change the economy or meaningfully disrupt markets.

That's not how it works.

If you go back in history, you'll find that most election years, the markets have done just fine volatility hasn't picked up significantly.

Um And you've seen, um you've seen the only time you've seen markets underperform is really in recessions all eight and, and uh and, and 2000.

So beyond that, the markets have done fine.

I mean, what you wanna hear now, I mean, I think they're both gonna pursue a pretty America first agenda.

Um I don't know if we're gonna get a lot of details about that.

On the debate stage.

You'd wanna get a better understand of where tax rates are gonna be um in a, in a second Biden administration.

But I think the bigger message to investors is that it largely doesn't matter as much as they expect it to.

Um, even if you look at the last two elections, the performance from the days that Trump and Biden were elected in November 16 and November 20.

Uh the market performance of both through their 1st 900 something days, trading days in office is almost exactly the same.

So it sounds like Brian, what you're telling clients when they're asking you is listen, it's an important but what you see me saying is it's important but it's one variable among many.

Yeah, it's certainly one variable among many.

And, and when I think about markets, I mean, it's always to me what's the direction of the economy and what's the fed gonna do?

And, you know, right now it's a global economy that's been fairly stable in aggregate and the market, you know, with some broadening out seems to think that things are getting a bit better um around the world and you have the fed that's likely to ease.

So to me that is more informative than whether I had a crystal ball right now to tell you who wins the White House, who's, who wins the Senate, who wins the House of Representatives?

I'd far rather have clarity around which part of the cycle we're in the next most likely direction of the economy and what the Federal Reserve is gonna do.

Brian.

Thank you so much for joining us.

Appreciate it.

My pleasure.

Thank you.

And now moving on to what to watch Tuesday, June 25th, starting off with the economy, the monthly S and P Case Schiller home price index report is coming out in the morning economist forecasting single family residential home prices to slow by 0.4% giving us more insight into the housing market as home buyers continue to get squeezed here by higher mortgage rates and inflation.

We're also going to get a new consumer confidence print for June on Tuesday.

That number expected to decline to points and moving on to the fed tomorrow.

We'll get two commentary piece of commentary from two fed governors, Michelle Bowman and Lisa Cook Bowman, speaking in London about the perspectives on us monetary policy and bank capital reform and cook will speak at the Economic Club of New York.

And finally, we're gonna get some more earnings including fedex carnival and Manchester United Fedex reporting fourth core results after the close.

And also we listen closely for clues about it $6 billion cost savings objectives company grappling, you know, with lower margin ecommerce growth coming up arm holdings is the latest addition to the NASDAQ 100.

We'll speak with the CEO on the other side of the break, more, more contamination overtime coming up, Nvidia's continued slide, dragging on the NASDAQ to start the final trading week of June and the final trading week of the quarter.

By the way, Yahoo Finance's Josh Schafer is joining us now with more on the trading day takeaways, NVIDIA, definitely a big part of the takeaways today, NVIDIA falling over 6%.

And I don't think it's a surprise when you see that, that you see the S and P 500 the NASDAQ also fall from their record highs and slip a little bit because we really saw you guys were looking at this earlier, Jared today, you saw decent participation, sort of across the market and some sectors certainly did well.

But when you consider Nvidia's weight in the S and P 500 also sort of the sentiment it has within the tech sector and within the chip space when that stock goes down, it's just not surprising to see the market wag on a day like that.

Uh Blackrock had an interesting note out today, sort of highlighting a chart that we've seen quite a bit over the last year, but sort of how tech has had an outsized per performance, drag up the S and P 500.

So what, what you're looking at here in purple is S and P 500 tech sector.

Light blue is the S and P 500 yellow is when you take tech out.

So if you took tech out, you wouldn't have a lot of the gains over the last year.

But on days like today, when tech does fall and the large stock, like in video falls, it sort of serves the other way.

It was interesting.

Blackrock highlighted today that they're still overweight us tech stocks and the large take away from that was because they still believe in the A I trade and they feel like the overweighting of the A I trade is more of a feature, not a bug of the current bull market.

It is a huge Josh just to see like whether that kind of like as we were talking earlier, the show, the baton can get handed off from NVIDIA.

I mean, it, it is interesting, NVIDIA come under pressure like this, but it's not like the market falls apart.

I mean, it hangs in there.

Yeah.

No, you saw signs of the broadening of that rally today, right?

When you look at sort of the rest of the sectors and what was to upper form, you look at something like the equal weight index for the S and P 500.

So that doesn't overweight NVIDIA in the same way the cap weight index does, the equal weight was up today.

It was up almost 0.7%.

The Russell 2000 and sort of a different index that's looking at smaller cap stocks was also up today.

So you saw some participation.

But I do think it is a reminder of though Josh is with how big the big tech stocks are.

Yes, we've talked about how this rally could broaden but it would be a lot slower of a chug higher if you don't have the mega caps helping you out.

When you take the mega caps out, you need other stocks to perform significantly better in order to get there.

It was interesting today, uh Morgan Stanley's, Mike Wilson was highlighting that he just doesn't see the transition to a full broadening really set right now and he highlighted something that a lot of people were talking about the start of the year.

Remember when we were talking about the broadening and seemed like everyone that came on the show talking about the broadening that we're gonna see in 2024.

1 of the base cases of that was sort of this economic resilience and economic data continuing to come in better than expected.

Well, now we're about six months into the year, like Julie just said, and when you look at something like the city Economic Surprise Index which tells you how economic data is coming in versus expectations, it's been going down pretty much all year.

So if your base case was, we're gonna have a broadening because data is continuing to come in better than we thought.

That's not really what's happened this far.

And so if that was one of your pillars, you're kind of losing that pillar.

And so maybe it's harder to reason why a broadening should come.

It's so tricky with that with those economic surprise indexes though, because for so long, economic data was surprising to the upside.

So you could argue that economists said just shifted the expectations, you know, we've been burned too many times.

And so now then you're disappointing.

But yes, I mean, a lot of economists are talking about that the data has even leaving out the surprise part of it, that things are getting a little bit worse.

And there are some vulnerabilities there which you could argue, could also argue for broadening in some ways, right?

If you, if some of those because then you get cuts because then you get cuts and some of the other groups if, if you take away, I don't know, there are groups that perform better from a defensive posture that haven't necessarily participated.

I don't know, Mike Wilson likes health care.

So there you go.

But that would be sort of one of the players you're mentioning, I think, right to that extent would be maybe OK, things are slowing down.

But you said some people that's he likes it.

I've seen that health care is almost like some I just talking about, I don't know if Mike Wilson does, but I'm saying some thinking of almost like utilities they see as Iron Man, I, I was gonna say both sides of the ball defense just like Josh in high school football, both sides of the ball.

Was it Michael Can?

Was, was one of, I think utilities was the one that also he talked about.

But yeah, a I and then also a defensive play.

I mean, it's hard.

Yeah, maybe.

Exactly.

All right.

Uh Josh Schaffer Joshua, thank you, appreciate it.

Moving on arm holdings getting added to the NASDAQ 100 today, the British semiconductor company will also be incorporated in several other NASDAQ indexes.

Shares of arm up nearly 100 and 40 percent since his public debut back in September, Rne Haas arm holding CEO joining us now, Renee, it is good to see you and, and maybe start on that news, Renee.

I'm just interested how, you know, how you think about it.

What does it mean for arm to be included like this?

Do you see it, Renee as you know, maybe a kind of milestone for the company.

What, what are you telling your team?

Well, uh thanks for having uh having me.

It's certainly a milestone.

It's something we're, we're proud of.

Uh the NASDAQ went under.

That's a, that's an elite company.

So for arm to be included on it, it's a, it's a very, very cool day and the employees and company are excited and so as you have this day and you're excited, I am curious because there's been so much talk lately, Renee about retail investors, right?

We've seen some glimmers again in the market of the meme stock trade.

I think Tesla is a part of this phenomenon as well with its retail stock, uh retail shareholder participation in its recent vote, for example.

So how are you thinking about that cohort of people who are interested in, in potentially owning arm holding stock?

You know, honestly, I don't think about it that much.

Uh My focus is really on the strategy trying to grow the company.

Uh One of the things I love most about my job is that I'm usually having discussions about technology in 2026 2027 2028.

Uh thinking about, you know, the question you just asked, I, I understand the question but it's actually not where I spend a lot of my focus.

Uh Renee, let's talk about one area I'm guessing is a focus for you, which is the mega trend of A I, you know, Rene we spend so much time on this show.

Of course, talking about it, investors are very excited and I, I know Renee, you, you know, I would argue, I'm sure, you know, um I think in fact, the last time we spoke, Renee, you said, you know, basically you can't run A I without ac pu can you just walk us through Renee you know, how you think about the opportunity for arm here, how, how big is the opportunity when we talk about this mega trend of A I, how do you quantify it?

Renee?

Yeah, I think that uh and, and I was around, you know, during the.com uh era, in fact, to me.com kind of started even in the late nineties with the browser and then the build out of the internet.

Uh To me this is much more profound uh because what A I is going to do is that it is going to really, really change people's lives in terms of productivity, whether that's call centers, it can become 100% automated uh healthcare uh bioresearch where you can cut the research of a cancer drug from 10 years to five years to three years.

This is all gonna be capable with A I and then every device that we use the data center, the automobile, your PC, your smartphone, they all need to run A I there, there's, there's no quibble around that.

And since 70% of the world's devices today use arm and they have to use A I on top of the arm based platform already.

It's just natural that we're going to be involved in it.

So it's something we spend a lot of time on.

But I don't think it's hyped at all.

I think it is going to be something that uh when we look back in terms of what the capabilities are and what it unleashes.

It's gonna be a momentous time in history.

Well, Renee, it's so interesting the relationship between A I and Arm because I gotta tell you coming up to the drumbeat of your IP O last September when there was a lot of talk about A I, we were talking to a lot of who were saying A I is not really the story for Arm yet that it's still early.

And so it seems though that you have been gaining a little steam in that area.

So can you tell our, our listeners and viewers right now kind of where you are for arm in that cycle?

Yeah, I thank you for the question.

I think respectfully, uh the analyst maybe didn't quite understand or have a an appreciation at the pace at which things were moving.

Uh There was a belief that A I meant you're running a large language model in the data center.

But if you look nine months later, we have an A I PC, we had Chet, chet GP T 40 running on a mobile phone doing voice recognition, which is being done in conjunction with the cloud and the local device.

You have Gemini uh an A I tool that runs on your cell phone.

Nobody was talking about those things a year ago and to be fair, it's not because the analyst didn't understand it.

It's just the pace that this is how this is moving.

And by definition, uh because of all the investments taking place in terms of training, all that training needs to find its way into applications.

And most of those applications will be in your handheld devices or your consumer devices.

So I think even the analysts probably didn't have a sense of just how fa how fast things are going.

And one of the things we'd like to talk about is that software is moving far faster than the hardware.

So I think that's the key learning that we've seen and, and perhaps the analysts as well.

And Renee, let's talk, let's talk smartphones as well.

I'll just get your take because, you know, we, we've had analysts um come on the show, Renee and say, listen, they, they think A I is gonna prove to be a real tailwind for the smartphone market, at least, you know, the premium segment is that how you see it, Renee?

And what, what would that mean for?

Or I think it will be a tailwind.

You know, remember that these smartphones iterate every single year and they add new and new technology, which puts a lot of strain on the system in terms of battery performance heat.

Now, when you have to run A I applications, in addition to all the applications you were running before, uh that's a complex design problem.

It's also a problem that arm is very, very good at solving.

And since most of these devices are already arm based and the software runs on arm, it's pretty natural that we're going to be in the center of all of that.

So, uh, we're pretty excited about the tailwind, not just for phones, but for a IP CS, uh, automobiles, consumer devices.

I think all of them are going to see a tailwind in the next number of years.

Renee, it seems as though when you talk about the speed at which things are moving, that the speed has maybe moved a little bit more on the enterprise side.

We've seen an enormous amount of demand on the consumer side, perhaps less so.

And so I'm curious to get your take because you're so enmeshed with this, what sort of the killer app on the consumer side could potentially be for a I or the killer use case?

Yeah, I, I don't think we know yet is the honest answer.

If you think about the, the move from three G to four G, you know, a number of years ago, no one could tell you that the killer app is gonna be, uh I now can order a car on demand, that'll know where I'm standing or I can now get a rental property at a very, very low discount and I can find them all very quickly.

But that's airbnb and Uber, you know, those, those apps were unleashed with four G. Now, when we think about A I at the consumer, I think first off we need to get the hardware capable, which is happening and then the apps will follow.

But uh the history has kind of shown that that's how the model tends to work.

So I don't know that the killer app is out there yet, but I'm also very confident that it will be very soon.

Renee, it is always great to have you on Yahoo Finance.

Thanks so much for joining us.

Thank you.

That is gonna do it for today's market domination over time.

Be sure to come back tomorrow at 3 p.m. Eastern for all of your coverage leading up to and after the closing.

But don't go anywhere on the other side of this break.

It's an exclusive interview with Treasury Secretary Janet Yellen, our Jennifer Schonberger will discuss a new slate of initiatives to support housing development and much more.

Stay with us.