Nvidia dips amid drop in chipmaking stocks, Bitcoin choppy - what's moving markets

Published 25/06/2024, 08:52
© Reuters

Investing.com -- U.S. stock futures are muted following a drop in AI-exposed chipmaking stocks in the prior session. Shares in Nvidia (NASDAQ:NVDA) slipped in particular, extending a decline in the maker of artificial intelligence-optimized processors into a third straight day. Elsewhere, meme-stock investor Roaring Kitty's stake in GameStop (NYSE:GME) falls into the red, according to the Financial Times, while the price of Bitcoin dips in volatile trading.

1. Futures muted

U.S. stock futures hovered close to the flatline on Tuesday after a mixed previous session highlighted by a drop in many artificial intelligence-related equities.

By 03:29 ET (07:29 GMT), the Dow futures contract had gained 37 points or 0.1%, S&P 500 futures were broadly unchanged, and Nasdaq 100 futures had inched up by 10 points or 0.1%.

The blue-chip Dow Jones Industrial Average notched a one-month high on Monday, as some investors rotated out of AI-exposed semiconductor firms like Broadcom (NASDAQ:AVGO), Marvell (NASDAQ:MRVL) Technology, and Qualcomm (NASDAQ:QCOM) in favor of other sectors such as energy. Nvidia, the chipmaking giant and AI-darling, dipped for a third consecutive session (more below).

The tech-heavy Nasdaq Composite posted its biggest one-day decline in nearly two months, while the benchmark S&P 500 ended the trading day 0.3% lower.

Markets are looking ahead to the release of the personal consumption expenditures price index report -- the Federal Reserve's preferred metric of inflation -- on Friday. The reading, which is tipped to show an easing in price pressures, could influence expectations for potential Fed interest rate reductions later this year.

2. Nvidia shares tumble

Nvidia shares fell another 6.7% on Monday, extending losses for a third straight session and erasing more than $430 billion in market capitalization over the three-day slide.

The California-based AI chipmaker ended last week with a market valuation of around $3.1 trillion, lower than Apple’s $3.2 trillion and Microsoft’s $3.3 trillion. The group briefly overtook Microsoft (NASDAQ:MSFT) last week to become the most valuable company in the world.

Despite the recent slide, Nvidia shares have surged by 138% year-to-date, making it one of the best-performing stocks on the Nasdaq 100 index.

Analysts have suggested that the downside move has more to do with sector rotation and profit-taking than fundamental issues at the business.

On Monday, analysts at Jefferies raised their price target to $150 per share from $135 while reiterating a Buy rating, arguing that "Nvidia remains both king and kingmaker" in the AI sector.

3. Roaring Kitty slips into the red - FT

A drop in shares in videogame retailer GameStop briefly pushed meme-stock influencer Keith Gill's position down into the red on Monday, according to analysis from the Financial Times.

Shares in GameStop, which had spiked last month in the wake of Gill's return to social media after a three-year absence, dipped below the $23.4135 price he paid for his 2.1% stake, the FT said.

The stock closed at $23.65, above Gill's purchase price but down by roughly 1.2% for the day. It has now slumped by more than 17% over the past five sessions.

4. Bitcoin volatile

Bitcoin moved lower on Tuesday in volaile trading, as a mix of regulatory fears, particularly over U.S. action and German government sales, coupled with broader risk aversion, kept crypto prices under pressure.

The world’s largest cryptocurrency had fallen 2.5% in the past 24 hours to $60,908.5 by 03:26 ET (07:26 GMT). It had dropped below the $60,000 mark in overnight trade, but later rebounded back above this level.

Bitcoin was nursing steep losses through the past week due in part to reports that the German government was selling tokens confiscated from a piracy website. This may lead to an influx in Bitcoin available in the market.

Meanwhile, other reports said the U.S. Commodity Futures Trading Commission was investigating market maker Jump Trading over its crypto trading activities. Jump President Kanav Kariya also said he was leaving the firm.

5. Crude stable

Crude prices steadied Tuesday ahead of the release of the latest information regarding U.S. crude inventories during the summer driving season.

By 07:28 ET, the U.S. crude futures (WTI) traded 0.1% lower at $81.56 per barrel, while the Brent contract dropped 0.1% to $85.03 a barrel.

Both benchmarks rose about 3% last week, marking two straight weeks of gains, boosted by increased demand as the U.S., the world's biggest oil consumer, enters the peak summer consumption period.

The American Petroleum Institute is set to release its forecast of U.S. crude oil stockpiles later in the session, ahead of the official report on Wednesday, and stocks are expected to have declined in the week to June 21.

That said, traders are cautious about pushing the market too much higher given that interest rates remain relatively elevated, potentially limiting growth in fuel consumption in the world’s largest economy.

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