US tech stocks weigh on market as Nvidia falls

US stocks closed lower on Wednesday as the market’s attempt to fully recover from Monday’s sell-off failed.

The Dow Jones Industrial Average fell 234.21 points, or 0.60 per cent, to 38,763.45. The S&P 500 declined 0.77 per cent and ended at 5,199.50, while the Nasdaq Composite dropped 1.05 per cent to close at 16,195.81. At session highs, the Dow surged 480.30 points, while the S&P 500 jumped 1.73 per cent. The tech-heavy Nasdaq was up more than 2 per cent at one point.

Small-cap stocks were the primary driver of market weakness this week, with the Russell 2000 index declining by 0.9 per cent on Wednesday alone. Due to their heightened sensitivity to economic shifts, small-cap companies have disproportionately suffered, resulting in a week-to-date loss of 3.1 per cent and a steep 9.4 per cent decline for the month of August.

Turning to US sectors, they were mixed overnight. Utilities was the best performer, whilst Consumer Discretionary was the worst.

JPMorgan CEO Jamie Dimon warned of persistent inflation, citing government spending and geopolitical risks. He doubts rate cuts will solve the problem. Despite this, he expects the Fed to cut rates soon. Dimon also declined to speculate on his retirement plans.

A rollover in Nvidia and other big technology stocks following an early jump led to the major averages tumbling in the afternoon. Nvidia pulled back 5.1 per cent, while shares of Super Micro Computer plummeted 20.1 per cent after the server company’s fiscal fourth-quarter earnings missed analyst estimates. Tesla also lost 4.4 per cent and Meta Platforms shed 1 per cent.

The benchmark 10-year Treasury yield continued its climb and rose about six basis points to 3.95 per cent. This marked a return to its level prior to the weak jobs numbers on Friday that raised concerns of an economic downturn.

The Cboe Volatility Index, known as Wall Street’s “fear gauge,” was last trading at nearly 28 after falling to as low as 22 earlier on Wednesday. The sharp decline from roughly 65 on

Monday indicates investors’ fears are abating, but still remain elevated from their initial levels at the start of the month.

Futures

The SPI futures are pointing to a 0.4 per cent fall.

Currency

One Australian dollar at 7.20am was buying 65.19 US cents.

Commodities

Gold has added 0.03 per cent. Silver has dropped 1.00 per cent. Copper has lost 1.86 per cent. Oil has gained 2.77 per cent.

Figures around the globe

European markets closed higher yesterday. London’s FTSE added 1.75 per cent, Frankfurt gained 1.50 per cent, and Paris closed 1.91 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei added 1.19 per cent, Hong Kong’s Hang Seng gained 1.38 per cent, while China’s Shanghai Composite closed 0.09 per cent higher.

Yesterday, the Australian share market closed 0.25 per cent higher at 7699.83.

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Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap, Marketech.

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