U.S. stocks sank Thursday after a tech-led rally fuelled by AI chip giant Nvidia’s (NVDA) blowout results and stock-split plans gave way to a broad sell-off.
The Dow Jones Industrial Average led the indexes lower, falling 1.5% Thursday, putting the index on track to finish the week lower. The S&P 500 shed 0.7%, while the Nasdaq Composite, up more than 1% early in the session, lost 0.4%.
Nvidia (NVDA) shares soared above $1,000 after its blockbuster quarter and guidance, as CEO Jensen Huang forecast “a lot of” revenue from its upcoming next-generation Blackwell chip. The AI behemoth’s results renewed optimism about robust AI spending, helping tech stocks hold onto the morning’s gains.
U.S. Treasury yields jumped after purchasing managers index data showed business activity grew at its fastest pace in more than two years in May, raising concerns that a resilient U.S. economy will delay interest rate cuts by the Federal Reserve.
The Dow
All but one of the Dow’s 30 components closed in the red Thursday. The one exception, Merck (MRK), finished flat.
Boeing (BA) led the index lower, falling 7.6% after Chief Financial Officer Brian West said he expects the plane maker’s cash flow and production problems to persist through the second quarter.
Tech giants Microsoft (MSFT) and Amazon (AMZN), up earlier in the day, fell 1.1% and 0.8%, respectively, as the optimism fueled by Nvidia’s earnings waned.
The Nasdaq 100
PDD Holdings (PDD) climbed 4.5%, building on yesterday’s gains following a better-than-expected earnings report.
Synopsys (SNPS) rose 2.3% after Ansys (ANSS) shareholders approved the former’s acquisition of the engineering software company. Ansys stock climbed 0.6%.
ASML Holding (ASML) was one of the few AI winners to hold onto at least some of the morning’s gains. It rose 1.3%.
GlobalFoundries (GFS) tumbled 8.9% after it priced a secondary public offering of nearly $1 billion of its stock, which is being sold by its largest shareholder, Mubadala Technology Investment Company.
The S&P 500
Nvidia (NVDA) jumped 9.3% after reporting another quarter of scorching hot revenue and earnings growth. The company also announced plans to split its stock 10-for-1.
Utilities companies Vistra (VST) and Constellation Energy (CEG), which supply AI data centers with the immense amount of electricity they require, gained 1.9% and 0.5%, respectively.
Ralph Lauren (RL) rose 3.3% after the fashion company reported better-than-expected quarterly results.
Dupont de Nemours (DD) ticked up 0.5% after announcing plans to split into three independent companies by spinning off its water and electronics units.
Live Nation (LYV) slumped 7.8% after the Department of Justice filed an antitrust lawsuit against the Ticketmaster parent.
Several mid-sized and regional banks fell after a strong Purchasing Managers Index print sent Treasury yields higher, tightening financial conditions. Comerica (CMA) slid 5.7%, while Charles Schwab (SCHW) fell 3.9% and KeyCorp (KEY) shed 3.8%.
Chipmaker Advanced Micro Devices (AMD), boosted early in the session by Nvidia’s earnings, slumped 3.1%. Super Micro Computer (SMCI), also an AI beneficiary, lost 3%.
Boeing’s (BA) shares tumbled Thursday after Chief Financial Officer (CFO) Brian West said during a conference Thursday that the company’s cash flow and production woes are likely to continue in the current quarter.
The company will likely continue to see similar negative cash flow in the second quarter after burning through $4 billion in the first quarter, West said, as production and deliveries were forced to slow down amid supply chain issues and a series of safety incidents that sparked investigations from regulators and law enforcement.
The Boeing Company. “Boeing Reports First Quarter Results.”
West said during Wolfe Research’s Global Transportation & Industrials Conference Thursday that Boeing expects cash flow to be more positive in the second half of 2024.
Analysts currently project Boeing to burn through about $2.12 billion in cash for the second quarter, returning to positive free cash flow in the second half of the year, according to estimates compiled by Visible Alpha.
Boeing shares were down more than 7% late in the afternoon on Thursday and are 33% lower this year.
Nvidia (NVDA) shares surged after the chipmaker’s better-than-expected earnings, but analysts indicated the chipmaker’s stock may still have a ways to go before reaching its peak.
Nvidia shares were up more than 11% Thursday afternoon. They’ve more than doubled in value since the start of the year, significantly outpacing gains for the S&P 500 and the Nasdaq 100, which have climbed close to 12% over the same period.
Analysts at UBS, Bank of America, Citi, Jefferies, JPMorgan, Wedbush, Melius Research, Bernstein, and Mizuho all lifted their price targets for Nvidia after the chipmaker’s earnings release.
Bank of America and Jefferies were among those with the highest new targets, at $1,320 and $1,350, respectively. Bernstein followed with $1,300, up from $1,000 previously.
On the lower end, Mizuho’s objective increased to $1,180 from $1,000, while JPMorgan lifted its target to $1,150 from $850.
See here for more about what analysts have to say about Nvidia’s earnings.
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AcademicFX, Nvidia, The Dow, The S&P 500
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