Drama on Wall Street: Tech Giant's Stock Plunges Ahead of Earnings Report
Pressure on the chip sector intensifies following reports of a 15% price hike in key systems, while oil prices drop and Bitcoin continues its unstoppable rally.
The flight from technology stocks deepened the split on Wall Street, but failed to paint all indices red. At the end of a volatile trading day, the Dow Jones index closed up 0.2%, while the S&P 500 index lost 0.25% and the Nasdaq weakened by 0.5%. Behind the mixed picture was particularly notable weakness in the chip sector, alongside a shift by investors to companies considered more stable and defensive.
The technology sector fell by 1.6%, with chip and memory stocks seeing heavy sell-offs. Nvidia continued to lose ground and completed a seventh consecutive day of declines, its longest negative streak since September 2022. The pressure on the stock was recorded ahead of the company's earnings release and against the backdrop of a report that large customers were notified of a price increase of more than 15% for AI servers based on its chips.
Sandisk, Seagate, Micron Technology, and Western Digital also suffered sharp declines. Earlier, it became clear that all 30 stocks comprising the Philadelphia Semiconductor Index were trading lower. Concerns surrounding Nvidia were also amplified by the fact that in the last four quarters, the company's stock weakened on the day after the earnings report.
Conversely, investors moved money into discount chains and consumer staples stocks. Dollar Tree, Target, Costco, and Walmart contributed to the strengthening of the sector, which rose by about 1%. Visa stock stood out in the Dow Jones with a 3% jump, reaching a 52-week high.
The bond market provided only partial relief. The yield on ten-year US government bonds fell slightly to 4.7%, but remained near a two-decade high. The market cast doubt on the ability of a long-term bond buyback program to lead to a significant change, especially after the US national debt crossed the $40 trillion mark.
Sharp movements were also recorded in the commodities sector. The price of a barrel of Brent crude oil fell by 2.55% and closed at $91.98, the sharpest daily decline in the last three weeks. The sell-offs came after details of the "economic isolation" operation against Iran were received by the market as less severe than the threats that preceded them.
On the other hand, Bitcoin continued to rise and strengthened by 1.7% to a level of more than $78,664. The rally in the digital currency also supported Strategy stock. The price of gold climbed simultaneously to about $4,710 per ounce, the highest level recorded since May.
Investors are now waiting for two focal points that may determine the direction of the markets: Nvidia's reports and the speech by Federal Reserve Chairman Kevin Warsh at the Jackson Hole conference. After a day where chips weakened, oil fell, and money flowed into defensive assets, these two events may decide whether the weakness in technology will continue or if the trend will reverse.
