{"id":544965,"date":"2024-07-18T08:39:04","date_gmt":"2024-07-18T06:39:04","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=544965"},"modified":"2024-07-18T08:39:04","modified_gmt":"2024-07-18T06:39:04","slug":"nvidia-and-amd-hammered","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/hardware\/544965-nvidia-and-amd-hammered.html","title":{"rendered":"Nvidia and AMD hammered"},"content":{"rendered":"

The world\u2019s largest technology companies got hammered as concern about tighter US restrictions on chip sales to China spurred a selloff in the industry that has led the bull market in stocks.<\/p>\n

From the US to Europe and Asia, chipmakers came under heavy pressure. American powerhouses Nvidia, Advanced Micro Devices and Broadcom drove a closely watched semiconductor gauge down almost 7% \u2014 the biggest slide since 2020.<\/p>\n

Across the Atlantic, ASML Holding NV tumbled over 10% even after the Dutch giant reported strong orders. A plunge in Tokyo Electron led losses in the Nikkei 225 Stock Average.<\/p>\n

Wednesday\u2019s action reprised a recent trend in which capitalization-weighted indexes underperformed the average stock, a consequence of weakness in the megacaps that dominate them.<\/p>\n

With firms such as Apple and Microsoft each making up 7% of the S&P 500, losses are hard to offset even when most of the index\u2019s members are up \u2014 as it happened today.<\/p>\n

The Biden administration told allies it\u2019s considering severe curbs if companies like Tokyo Electron and ASML keep giving China access to advanced semiconductor technology.<\/p>\n

\u201cThis news on the chip front is the kind of UFO (UnForeseen Occurrence) that could indeed create the kind of selling that could be the catalyst for a tradable correction in the stock market,\u201d said Matt Maley at Miller Tabak + Co. \u201cBroad indices have become very overbought.\u201d<\/p>\n

The S&P 500 fell 1.4%, while the tech-heavy Nasdaq 100 had its worst day since 2022.<\/p>\n

A Bloomberg gauge of the \u201cMagnificent Seven\u201d megacaps slipped about 3.5%. The Russell 2000 of smaller firms dropped 1.1%.<\/p>\n

Wall Street\u2019s \u201cfear gauge\u201d \u2014 the VIX \u2014 hit the highest since early May. In late hours, United Airlines Holdings gave a bearish outlook.<\/p>\n

A pair of chipmakers defied the selloff: Intel Corp. and Globalfoundries Inc.<\/p>\n

The Dow Jones Industrial Average climbed for a sixth straight day \u2014 notching another record. Financial shares outperformed, with U.S. Bancorp surging on solid results.<\/p>\n

The bond market saw small moves. The Federal Reserve\u2019s Beige Book showed slight economic growth and cooling inflation.<\/p>\n

The most-notable speaker on Wednesday was Governor Christopher Waller, who said the Fed is getting \u201ccloser\u201d to cutting rates, but is not there yet. The yen led gains in major currencies, up almost 1.5%.<\/p>\n

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The Biden administration is in a tenuous position. US companies feel that restrictions on exports to China have unfairly punished them and are pushing for changes.<\/p>\n

Allies, meanwhile, see little reason to alter their policies when the presidential election is just a few months away.<\/p>\n

Meanwhile, Donald Trump, speaking in an interview with Bloomberg Businessweek, questioned whether the US has a duty to defend Taiwan \u2014 a major hub of semiconductor manufacturing.<\/p>\n

\u201cNormally, the impact of these types of headlines isn\u2019t long-lasting, but in this case, we would note that semis have been underperforming the broader market for the last couple of weeks now,\u201d said Bespoke Investment Group strategists. \u201cSo that\u2019s something to watch.\u201d<\/p>\n

The tech underperformance is coming after a first half which saw megacaps propel the market higher, stretching\u00a0valuations\u00a0for these names and leaving them with a tougher setup for the rest of 2024.<\/p>\n

Can the market keep powering ahead without tech?<\/p>\n

\u201cMuch of this year\u2019s equity gains have come from a handful of names currently under direct threat from the political arena,\u201d said Jose Torres at Interactive Brokers.<\/p>\n

\u201cAn important question is if the rest of the market, which generally lacks thrilling tales on a relative basis, can offset the waning momentum in \u2018Magnificent Seven\u2019 stocks.\u201d<\/p>\n

At Goldman Sachs Group Inc., Scott Rubner says \u201cI am not buying the dip.\u201d<\/p>\n

The tactical strategist bets the S&P 500 has nowhere to go from here but\u00a0down. That\u2019s because this Wednesday, July 17, has historically marked a turning point for returns on the equity benchmark, he said, citing data going back to 1928.<\/p>\n

And what follows, he says, is August \u2014 typically the worst month for outflows from passive equity and mutual funds.<\/p>\n

Jonathan Krinsky at BTIG says the market is \u201cnearing the end of the typical bullish window.\u201d<\/p>\n

Sentiment remains extremely complacent on the surveys and transactional indicators, he noted.<\/p>\n

\u201cWhile the rotation out of megacap tech into cyclicals and small-caps is encouraging, it felt a bit forced happening in such a short period of time,\u201d Krinsky said.<\/p>\n

\u201cEven if this is going to be a more long-lasting rotation, we likely won\u2019t be able to see that new leadership until after we see a higher correlation correction and then see what leads coming out of that.\u201d<\/p>\n

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