Nvidia - Rotation ?
Rotation ?
The violent rotation from Big Tech plunged the Nasdaq 100 Index into correction territory, wiping out more than $2 trillion in value in just over three weeks, as traders unwound bets that had been minting money for over a year.
The index closed down 2.4% on Friday, taking its loss since a July 10 record to more than 10%, passing the threshold that meets the definition of correction.
The index closed at its lowest since mid-May on Friday, but remains up nearly 10% for the year.
Bloomberg 2 August 2024
What a difference a day makes.
Data-dependency can be painful.
Wednesday finished on a high for the US stock market as investors reacted to strong hints from the Federal Reserve that it would be cutting rates in September.
Thursday, however, saw a selloff as some downbeat economic data immediately prompted fears that the Fed had made a mistake and should already have cut.
If the Fed is wrong, note that the market’s behavior this week suggests that plenty of others would have made the same mistake.
All of this could of course change once the non-farm payrolls data for July is available, not long after this newsletter is published.
Back in March, Points of Return wrestled with the comparisons between Nvidia in 2024 and Cisco Systems in 2000.
The former is the chief beneficiary of the AI excitement because it creates the hardware to make it work, just as Cisco gained more than anyone else from the internet as the dominant force in routers.
John Authers Bloomberg 2 augusti 2024
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