A view of NVIDIA’s headquarters in Santa Clara in Silicon Valley, California, United States on August 28, 2024.
Tayfun Coskun Anatolia Getty Images
This report is from today’s CNBC Daily Open, our international market newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. As you see? You can subscribe here.
What you need to know today
Nvidia is sinking
Nvidia shares fell 9.5% Tuesday, wiping nearly $300 billion from its market capitalization. Other chipmakers are also affected: The VanEck Semiconductor ETF down 7.5%. Nvidia’s play continued in full training, down 2% after it was reported that the company received subpoenas as part of an antitrust investigation.
Hammer is not very hot
The Institute for Supply Management’s monthly survey showed only 47.2% of purchasing managers reported expansion for August. That means the US manufacturing sector is experiencing an overall contraction. While the 47.2% figure was an improvement from July, it was still lower than the expected 47.9%, adding to concerns about the US economic slowdown.
Bad market
Dragged down by Nvidia’s plunge and weak economic data, US stocks had their worst day since August 5 sell-off. European shares fell on Tuesday, with all major bourses and most sectors in the red, although food and beverage stocks managed to gain 0.09%.
Less heat
US crude oil futures fell more than 4% on Tuesday to settle at $70.34 per barrel, more than erasing gains for 2024. Oil’s weak performance was mainly due to OPEC+ plans to increase oil production, according to Reuters, and was exacerbated by the weakness of the Chinese economy. , which dampens demand for oil.
(PRO) Go for gold
When interest rates are high, the price of gold tends to suffer – unlike other options because it doesn’t earn interest. On the other hand, when geopolitics heat up, gold is a good hedge against financial risk. Now with rate cuts on the horizon and tensions remaining high, Goldman Sachs is telling clients to “find the gold.”
Bottom line
Some investment advice from an unlikely source: recently reunited British band Oasis. In one song, he sings, “Hold on / Don’t be afraid / You can’t change what’s gone and gone.”
Investors should keep that in mind while absorbing Tuesday’s market move. At S&P 500 down 2.12%, in Dow Jones Industrial Average down 1.51% and on Nasdaq Composite lost 3.26% (duh).
A combination of factors may have contributed to the market’s weakness on Tuesday.
First, US manufacturing activity remained in contractionary territory for August. That raised concerns that the US economy is not as strong as it seems.
Next, Nvidia fell by almost 10%. Other chip makers were also hit by the shockwave. Intel lost 8.8%, AMD fell 7.8% and Qualcomm down 6.88%. And in extended trading, Nvidia fell about 2% on reports that the US Department of Justice has begun investigating the chipmaker on antitrust grounds.
Finally, some of those gloomy moods are just expectations.
Historically, September is the worst month for the S&P. The index has lost an average of 2.3% over the past 10 September, according to FactSet data.
That’s all to say: Yes, there is a real reason to feel concerned for the month. Fundstrat founder Tom Lee warned investors to be cautious over the next eight weeks, and thinks stocks could pull back 7% to 10%.
But it is also important not to react impulsively.
Although the ISM reading showed manufacturing activity declined, by more than 42.5%, that generally signals expansion in the broader economy, said Timothy Fiore, chairman of the ISM Manufacturing Business Survey Committee.
And Nvidia is still up 118% for the year, even after its $300 billion market cap on Tuesday.
As another Oasis song says, when it comes to investing for the long term, we should remember “The Importance of Being Idle.” Don’t let panic take over.
– CNBC’s Jeff Cox, Alex Harring and Fred Imbert contributed to this report.
