Wall Street Wrap-Up
On Monday, Wall Street’s main indexes closed lower, weighed down by technology stocks after China announced an antitrust investigation into Nvidia. The chipmaker’s shares dropped 2.5%, impacting broader market sentiment. This led to losses of over 0.5% in the Dow Jones, while the S&P 500 and Nasdaq both fell approximately 0.6%. Nvidia’s movements often influence the tech sector, and its decline extended to other major technology stocks.
Despite the decline, many analysts view these pullbacks as opportunities in what has been a robust year-end bull market. Treasury yields rose slightly, with the U.S. 10-year benchmark yield edging up but remaining 30 basis points lower over the past month, providing some support for equities.
Corporate News Highlights
- Advanced Micro Devices (AMD): Shares dropped 5.5% following a downgrade from BofA Global Research.
- Oracle: Revenue for Q2 increased by 9% year-over-year to $14.06 billion, but missed Wall Street’s $14.11 billion estimate. Oracle shares fell over 7% in after-hours trading, driven by lower-than-expected profit forecasts.
- Comcast: Shares plummeted 9.5% after forecasting broadband subscriber losses exceeding 100,000 in Q4, due to competition from wireless providers and hurricane impacts in Florida. Rival Charter Communications also saw a 6.5% decline.
- Hershey: Shares surged nearly 11% amid reports of potential acquisition interest from Mondelez. However, any deal would require approval from the Hershey Trust Company, which holds voting control over Hershey.
Global Markets Update
On Tuesday, most Asian equities rose, driven by optimism around China’s fiscal stimulus and monetary policy announcements for 2025. Key indices included:
- Shanghai Composite: Up 1.6%.
- Hong Kong Hang Seng: Increased by 1.5%.
- South Korea KOSPI: Rebounded with a 2.4% gain.
Investors hope China’s measures will support global demand, despite persistent U.S.-China trade tensions.
In Europe, the Euro Stoxx 50 saw gains, buoyed by optimism over China’s economic stimulus. European luxury goods companies, like Kering, experienced a boost, while Volkswagen rose over 1% despite ongoing strikes and protracted wage negotiations.
Currency and Commodities Update
- U.S. Dollar Index: Steady at 106.1 as investors awaited inflation data that could influence Federal Reserve decisions.
- EUR/USD: The pair traded near 1.0560, reflecting strong dollar performance amid rising U.S. inflation expectations.
- Oil Prices: Declined slightly in Asian trading, reversing gains driven by China’s stimulus and geopolitical developments in Syria.
Equities on the Move
- Nvidia: Under investigation by China for potential anti-monopoly violations, including its acquisition of Mellanox Technologies in 2020. Analysts suggest the impact on Nvidia may be limited, as its advanced chips are already restricted from being sold to China.
- Hershey and Mondelez: Reports indicate Mondelez is exploring the acquisition of Hershey, which would create one of the world’s largest confectionery firms.
- PayPal: Upgraded by Bank of America to “Buy,” citing a positive turnaround, stable payment volume growth, and share buybacks. A new checkout button rollout in 2025 further supports growth prospects.
- Robinhood Markets: Upgraded to “Overweight” by Barclays, which highlighted its strategic focus on the crypto landscape and evolving market conditions.
Upcoming Data and Events
Investors are focused on Wednesday’s U.S. inflation report, which could shape Federal Reserve rate expectations. Additionally, the European Central Bank is expected to announce a 25-basis-point rate cut later this week, offering further clarity on its policy direction.
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