Markets News, September 6, 2024: Stocks Tumble After Jobs Report, Led by Tech Selloff; Nasdaq Has Worst Week Since Early 2022

Biggest S&P 500 Movers on Friday

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Decliners

• Broadcom (AVGO) shares plunged 10.4%, the biggest decline of any S&P 500 stock, after the chipmaker reported a loss for its fiscal third quarter and guided for current-quarter sales to come in below consensus estimates. Despite the strength of Broadcom’s artificial intelligence (AI) segments, weakness in its broadband business and other divisions weighed on the results. Expenses related to Broadcom’s acquisition of software firm VMware in November also contributed to the quarterly loss.
• Tesla (TSLA) shares slipped 8.5% on Friday, giving back the strong gains posted in the prior session after the electric vehicle (EV) maker announced plans to launch full self-driving (FSD) cars in Europe and China in early 2025. Friday’s reversal came amid reports highlighting potential regulatory barriers to FSD approval, particularly in Europe, as well as a Financial Times story pointing to Tesla’s market share struggles in China, where increasing sales of plug-in hybrid vehicles have intensified competition.

• Shares of Albemarle (ALB), the world’s largest lithium miner, fell 6.9% as lithium prices remained under pressure. Lithium futures prices in China dropped to their lowest level since the launch of the contracts in July 2023, reflecting high supply levels. Moreover, uncertainty surrounding the U.S. presidential election raises questions about the future of policies designed to encourage electric vehicle (EV) adoption, which could shape the future trajectory of lithium demand.

Advancers

• Dollar General (DG) shares logged the top daily performance in the S&P 500, jumping 2.7%. The stock lost nearly a third of its value on Aug. 29 after the discount retailer reported weaker-than-expected results for the second quarter and lowered its full-year revenue forecast. It fell again earlier this week when earnings from competitor Dollar Tree (DLTR) also underwhelmed. Despite the overhangs of macroeconomic pressure and restrained consumer spending, Dollar General’s results included year-over-year sales growth in the consumables category.
• Shares of telecom infrastructure SBA Communications (SBAC) were up 2.2%. In its most recent earnings report, released in late July, the cellular tower operator reported better-than-expected adjusted funds from operations (AFFO), with growth in site leasing revenue driven by new leasing activity in international markets. Shares of communications infrastructure peer Crown Castle (CCI) gained 2.0%.
• United Airlines (UAL) shares climbed 2.0%. The gains for United followed positive comments from fellow carrier JetBlue (JBLU), which raised its full-year sales outlook on Thursday, noting strong summer travel demand. A decline in crude oil prices on Friday, suggesting a possibility of lower fuel costs ahead, provided an additional tailwind for United stock.

–Michael Bromberg

Chip Stocks Have Worst Week in More Than 2 Years

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Chip stocks slumped this week, with the PHLX Semiconductor Index (SOX) tumbling 10%, its biggest weekly decline since January 2022.

Market darling Nvidia (NVDA) shed 4.1% on Friday to finish the holiday-shortened trading week down almost 14%. That’s about as much as lost by Intel (INTC), which on Tuesday was hit with reports that it could lose its coveted place in the Dow Jones Industrial Average. Broadcom (AVGO) tumbled 10% on Friday after posting disappointing quarterly results on Thursday afternoon. The stock lost nearly 16% of its value this week. 

Chip stocks’ rough week comes as concerns about the health of the economy mount, with Friday’s jobs report providing the latest evidence of weakness. It was a similar report on August 2 that capped off semiconductors’ second-worst week of the year (-9.7%).

Economic concerns have coincided with a shift in investor sentiment around artificial intelligence. Corporate spending on AI, once music to Wall Street’s ears, has come under scrutiny in recent months. Big tech’s ballooning capital expenditures have some investors worried about when—or if—the spending will pay off. That has dampened the mood of tech investors and weighed on shares of the semiconductor companies whose products are AI’s vital organs.

The industry’s second-quarter earnings—specifically their outlooks for the rest of the year—have also struggled to meet investors’ exceedingly high expectations. Nvidia again topped earnings expectations last week, but growth has slowed. And after a year of blowout reports, its good sales guidance was simply not good enough.

–Colin Laidley

What Fed Officials Said After Friday’s Jobs Report

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The time for interest rate cuts is here, several Federal Reserve officials said Friday in response to more data showing a softening of the labor market.

Federal Reserve Gov. Christopher Waller said the jobs report released earlier in the day helped make the case for a rate cut.

“As of today, I believe it is important to start the rate-cutting process at our next meeting,” Waller said during a speech at the University of Notre Dame. The Fed’s policy committee is scheduled to meet Sept. 17-18.

In his remarks, Waller suggested upcoming data could influence the Federal Reserve to consider cutting even more than the quarter-percentage point reduction initially expected.

“If the data supports cuts at consecutive meetings, then I believe it will be appropriate to cut at consecutive meetings. If the data suggests the need for larger cuts, then I will support that as well,” Waller said. 

Friday was the last day for Federal Reserve officials to comment on monetary policy before the blackout period that proceeds Federal Open Market Committee meetings.

Waller wasn’t the only Fed official to use his last public comments to lay out the case for rate cuts at the upcoming meeting.

“It is now appropriate to dial down the degree of restrictiveness in the stance of policy by reducing the target range for the federal funds rate,” New York Fed President John Williams told an audience at the Council on Foreign Relations.

–Terry Lane

Qualcomm Reportedly Considering Purchase of Intel Assets

3 hr 9 min ago

Qualcomm (QCOM) has reportedly looked into buying segments of Intel (INTC), potentially including its PC chip design business.

Reuters on Friday said the maker of semiconductors for mobile devices has explored the idea of purchasing different parts of Intel. One of its sources said that the PC design unit is of “significant interest,” although they are considering all of Intel’s design operations. 

The report is the latest to describe possible deal activity for Intel, which is seeking to reinvigorate interest in its shares. One recent story indicated that it might sell some of its stake in MobilEye (MBLY); another discussed options regarding its foundry business.

Intel’s shares were recently down 2.6% whileQualcomm’s were off 3.3%, amid a broader downturn for chip stocks.

–Bill McColl

Super Micro Computer Continues Sliding

4 hr 9 min ago

Shares of Super Micro Computer (SMCI) dropped Friday after J.P. Morgan analysts downgraded the server maker’s stock, citing concerns over the company’s delayed annual report.

The analysts downgraded Super Micro’s stock to “neutral” from “overweight” and cut their price target to $500 per share from $950—valuing the stock more similarly to other hardware manufacturers with “lower growth trajectories to account for the uncertainty.”

Super MIcro’s shares were recently down about 6% to around $388. Wall Street’s mean price target is just above $450, according to Visible Alpha. The stock is still up about 35% in 2024 but is down from a high of around $1,200 in March.

The stock has been under pressure recently following lackluster earnings. In addition, a report in late August from short seller Hindenburg Research accused the company of “accounting manipulation, sibling self-dealing and sanctions evasion.”

Super Micro recently delayed the release of its annual report, saying it needed more time to “complete its assessment of the design and operating effectiveness of its internal controls over financial reporting.”

JP Morgan’s analysts said the delay could have an impact on the behavior of customers who could be looking for better prices from the server maker. They noted the delay could also cause an “overhang,” recommending new investors “remain on the sidelines” until the uncertainty is resolved.

There is “not a clear rationale” for new investors to buy into Super Micro’s stock until the company’s regulatory issues are resolved,” they wrote.

–Aaron McDade

Intel Reportedly Considers Cutting MobilEye Stake

6 hr 24 min ago

Shares of MobilEye Global (MBLY) slumped Friday after reports that Intel (INTC) is considering selling off some of its stake as part of the chipmaker’s effort to improve its financial position.

Bloomberg, citing people familiar with the matter, said Intel could offload some of its holdings in a public sale or third-party transaction. Intel has about an 88% stake in MobilEye, according to a recent regulatory filing.

MobilEye, which provides hardware and software for self-driving vehicles, has been struggling as automakers cut back production to clear out their post-pandemic inventory glut. Shares have plunged this year, with today’s losses sending them to record lows.

Intel shares have also been sinking. Recent reports have indicated CEO Pat Gelsinger and other executives are looking at options including shedding assets. The stock is trading around its lowest level in more than a decade.

MobilEye shares were down nearly 7% in recent trading, while Intel shares fell 3%.

–Bill McColl

Berkshire Further Trims Bank of America Stake

6 hr 39 min ago

Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) further trimmed its stake in Bank of America (BAC), selling just over 18.7 million shares over the course of this week, according to a filing by the U.S. Securities and Exchange Commission (SEC).

Berkshire has made cuts to its stake in Bank of America in recent months after the bank’s stock hit a two-year high following an earnings beat. The bank’s stock price has retreated from its July 16 closing price of $44.13, but is still close to 18% above where it started the year.

Berkshire sold Bank of America stock in each of the last nine trading sessions, dating back to Aug. 26, bringing its stake down to about 864 million shares at Thursday’s close, from just under 950 million shares at the start of the month. The latest sales put Berkshire’s stake at just over 11% of Bank of America’s 7.77 billion outstanding shares, currently worth about $34.7 billion.

Bank of America shares were down 2% in recent trading.

–Aaron McDade

Chip Stocks Once Again Leading S&P 500 Lower

7 hr 19 min ago

Friday’s early-session selloff is broad based, but it’s technology stocks that are showing the biggest declines.

The Information Technology Sector was down 1.5% recently, led by steep declines for chip makers.

AI investor darling Nvidia (NVDA), which has been especially volatile since releasing quarterly results last week that fell short of the loftiest Wall Street expectations, was down about 4% in recent trading.

The top decliner on the S&P 500 Friday is chipmaking giant Broadcom (AVGO), which was down nearly 10%. Other chip stocks, including Advanced Micro Devices (AMD) and Micron (MU), were also down sharply.

The VanEck Semiconductor ETF (SMH) was down nearly 4%.

Bitcoin Trading at Lowest Levels Since Early August

9 hr 39 min ago

Bitcoin (BTC) lost ground in early trading on Friday, moving below $56,000, after falling more than 3% yesterday as investors braced for the highly anticipated August jobs report, a key piece in the puzzle for gauging the timing and size of widely expected interest rate cuts by the Fed.

Rate cuts could provide a boost to the legacy cryptocurrency, which has fallen around 24% since setting its record high on March 14 amid a lack of new narratives to drive bullish sentiment.

Bitcoin has oscillated within a channel-like pattern since topping out in March this year, with the price recently trading towards the pattern’s lower trendline.

Investors should watch key support levels on Bitcoin’s chart at $53,000 and $47,000, while monitoring important resistance levels at $65,000 and $68,500.

Read the full technical analysis piece here.

–Timothy Smith

Broadcom Price Levels to Watch as Stock Tumbles

9 hr 46 min ago

Broadcom (AVGO) shares were down more than 7% in premarket trading after the chipmaker late Thursday reported fiscal third-quarter results that topped expectations but issued light revenue guidance for the current quarter. 

Broadcom shares have traded within a symmetrical triangle on declining volume since mid-June, with the price sending an ominous signal ahead of the chipmaker’s quarterly report by testing the pattern’s lower trendline. The stock sits positioned to stage a significant breakdown from the triangle on Friday.

Investors should monitor important lower price levels on Broadcom’s chart at $141, $120, $104, and $91.

Read the full technical analysis piece here.

–Timothy Smith

How Will the Jobs Report Affect Rate-Cut Expectations?

10 hr 10 min ago

One of the big questions heading into this morning’s release of the August employment report is how the data will affect the Federal Reserve’s thinking about interest rate cuts.

Fed Chair Jerome Powell has signaled that rate cuts could come as soon as the mid-September meeting of the central bank’s policy committee, but has said that incoming data will drive the decisions on the pace and depth of the easing.

Heading into Friday’s data release, market participants were pricing in a 39% likelihood that the Fed will cut the influential fed funds rate by half a percentage point when it meets on Sept. 18, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data. While that’s up from the 30% chance that was priced in a week ago, it’s down from around 70% a month ago when markets tanked following the weaker-than-expected July jobs report.

If the number of jobs added in August comes in far below the 161,000 estimated by economists or the unemployment rate is higher than the 4.2% consensus view, expectations for a half-point rate cut are likely to rise.

Looking further out, market participants see an 85% likelihood that the fed funds rate will be cut a full percentage point by the end of 2024, to a range of 4.25%-4.50%. That would mean that the Fed has to make at least one half-point cut in one of its three remaining scheduled meetings.

Major Index Futures Lower Ahead of Jobs Report

10 hr 54 min ago

Futures tied to the Dow Jones Industrial Average were down 0.4%.

S&P 500 futures were down 0.7%.

Nasdaq 100 futures were off 1.2%.