$NVDA Drops 5% & Brings The Market Down With It & $AAPL Is In Hot Water Again!
With the last week of the Q2 in sights ending the first half of 2024, the market is starting to taper down. continued to slide dragging down the Nasdaq. Lets dive straight into our indexes to see how they performed today:
The S&P500 shed around 0.3%
The Nasdaq Composite fell more than 1%
The Dow Jones Industrial Average jumped up 0.7% while investors move into the energy sector
The market and investors alike are hoping for this rally to continue to drive things more into the green but the bell of the ball has fallen more than 11% since its peak a couple of weeks ago. The Macroeconomic front and US political scene stole more of the spotlight with Trump & Biden set to debate on Thursday.
On inflation, the Personal Consumption Expenditures (PCE) index is coming out Friday morning, which contains the “core PCE measure which is a strong indicator for the Federal Reserve. The street is expecting PCE to rise only 0.1% which would be the slowest monthly rise since last November. If expectations are met this would add to a series of positive data prints that could easy Fed policymakers’ concerns about rate cuts this year. Traders are currently banking on a September rate cut according to the CME FedWatch tool.
Nvidia Stock Takes a Hit: What’s Behind the 6% Drop? 🤔
Nvidia’s (NVDA) stock price took a significant hit on Monday, falling over 6% to close at $118.11 per share. This marks the third consecutive day of losses for the chip heavyweight, with the stock declining more than 12% from its all-time closing high of $135.58 last Tuesday. Nvidia’s market capitalization, which briefly surpassed Microsoft’s (MSFT) to become the most valuable company, has since fallen to around $2.9 trillion. This puts it below Microsoft’s and Apple’s (AAPL) valuations of more than $3 trillion each. Up until last Thursday, Nvidia played a crucial role in driving the S&P 500 (^GSPC) and the Nasdaq (^IXIC) to repeated record highs in 2024. However, the company’s recent stock split, which was completed on June 10, may have contributed to the current sell-off.
Wall Street’s Mixed Reaction
Analysts are divided on whether the recent sell-off signals long-term concerns with the stock. Bank of America analysts have reiterated a Buy rating and $150 price target, calling Nvidia a “top pick” and stating that any volatility is likely to be short-lived.
On the other hand, Jefferies analysts have maintained a Buy rating and raised their price target to $150 from $135, calling Nvidia the “king and kingmaker.” However, Patrick Moorhead, founder and CEO of Moor Insights & Strategy, has cautioned investors to be watchful for signs that the pullback may be more than just a temporary correction.
The Bigger Picture: AI Adoption and Downstream Profitability
Moorhead suggests that investors should focus on the downstream profitability of companies in the AI ecosystem, such as Adobe, Salesforce, SAP, and ServiceNow. If these companies are not generating significant revenue from AI features, it could signal a broader slowdown in the AI gravy train.
Apple’s Legal Woes Mount: EU Regulators Accuse Tech Giant of Violating New Law 🚨
Apple’s (AAPL) legal troubles just got a whole lot worse. On Monday, European Union regulators announced that the tech giant had violated the Digital Markets Act (DMA), a new law designed to rein in the power of tech giants like Apple.
According to the EU’s European Commission, Apple’s App Store rules illegally blocked software developers from telling customers how to access content outside the app store. This is a clear violation of the DMA, which aims to prevent dominant tech companies from stifling competition. If found guilty, Apple could face fines of up to 10% of its global annual revenue, which reached a staggering $383 billion in 2023. That’s a potential fine of $38.3 billion! Additionally, the EU has opened a separate investigation into Apple’s practice of charging a “core technology fee” for iOS apps available in the EU.
Apple’s Response
Apple is fighting back, claiming that it has made changes to comply with the new EU law and is confident that its plan complies with the law. The company also estimates that over 99% of developers would pay the same or less in fees under its new business terms. This is just the latest in a series of legal headaches for Apple. The company is already facing antitrust charges from the US Justice Department and 16 state attorneys general, who allege that Apple used illegal tactics to maintain its monopoly in the smartphone market. Despite the news, Apple’s stock actually rose over 1% on Monday. It seems investors are shrugging off the legal woes, at least for now.
The Digital Markets Act
The DMA, which went into effect in March, targets six Big Tech companies, including Apple, Amazon (AMZN), Alphabet (GOOG, GOOGL), ByteDance, Microsoft (MSFT), and Meta (META). The law aims to prevent these dominant tech companies from blocking smaller rivals from entering certain markets. As the tech industry continues to evolve, it’s clear that regulators are taking a closer look at the practices of these giant companies. Will Apple be able to navigate these legal challenges and come out on top, or will it face significant fines and changes to its business model? Only time will tell.
