Mixed Market Closes Week as Nvidia Soars, Retailers Disappoint (Weekly Cheat Sheet)

The market ended the week on a mixed note, with the S&P 500 and Nasdaq Composite eking out gains while the Russell 2000 and Dow Jones Industrial Average suffered sizable losses.

Investor sentiment was cautious in the early part of the week as market participants awaited NVIDIA’s (NVDA) earnings report on Wednesday. NVIDIA delivered blockbuster results and guidance, igniting a rally in semiconductor and AI-related stocks. However, this optimism did not spill over to the broader market amid concerns that equities are overdue for a pullback.

The PHLX Semiconductor Index (SOX) soared 4.8%, the Vanguard Mega Cap Growth ETF (MGK) advanced 1.6%, and the Russell 3000 Growth Index added 0.9%. The tech-heavy price action lifted the S&P 500 information technology sector by 3.4%, one of only two sectors to finish in the green along with communication services (+0.3%). On the flip side, energy (-3.8%) and real estate (-3.7%) were the biggest laggards.

Investors digested a flurry of retail earnings from the likes of Target (TGT)Lowe’s (LOW)TJX Companies (TJX)AutoZone (AZO), and Macy’s (M). The results were a mixed bag.

On the economic front, data was also varied:

  • The S&P Global U.S. Manufacturing PMI ticked up to 50.9 from 50.0
  • The S&P Global U.S. Services PMI surged to 54.8 from 51.3
  • New home sales in April missed forecasts
  • Durable goods orders in April topped expectations
  • The University of Michigan’s final consumer sentiment reading showed 1-year inflation expectations cooling to 3.3% from 3.5%

Yields climbed, with the 10-year Treasury yield rising 4 basis points and the 2-year yield jumping 13 basis points to 4.95%.

US Market Highlights

  1. Business activity in the US picked up steam in May, though manufacturers faced higher input costs. The S&P Composite PMI hit a nearly 2-year high of 54.4.
  2. New home sales surprisingly dropped in April as elevated mortgage rates weighed on demand. The supply of homes for sale climbed 16% year-over-year while the median price increased 5.7% to $407,600.
  3. The Department of Justice filed an antitrust lawsuit against Live Nation and Ticketmaster, seeking to break up the companies. The DOJ alleges the combined entity, which dominates the ticketing market, stifles competition.
  4. Orders for capital goods beat projections, hinting at a rebound in business investment. Inflation expectations also fell, with the 1-year outlook dipping to 3.3% from 3.5%.
  5. President Biden announced $7.7 billion of additional student loan forgiveness for over 160,000 borrowers. To date, Biden has now cancelled more than $167 billion in student debt for 4.75 million people.
  6. Lululemon’s Chief Product Officer stepped down to take another job opportunity amid a restructuring of the retailer’s product and brand teams. Lululemon will eliminate the CPO role.
  7. Telehealth company Hims & Hers Health introduced a $199 per month weight loss injection that contains the same ingredient as popular GLP-1 drugs from Novo Nordisk and Eli Lilly, but at a significantly lower price point. Hims shares jumped 16% on the week.

Global Highlights

  1. Eurozone business activity accelerated in May, with the S&P Composite PMI rising for a third consecutive month to 52.3. Germany led the charge as its services sector boosted its PMI to a 1-year high.
  2. Shipping container rates have spiked 30% in recent weeks as 90% of vessels rerouted away from the Red Sea to avoid attacks by Houthi rebels. Ships are instead navigating around Africa’s Cape of Good Hope, adding 2.5 weeks to transit times.
  3. Ebrahim Raisi, the President of Iran, was killed in a helicopter crash while traveling back from Azerbaijan in stormy weather. Iran’s Foreign Minister Hossein Amirabdollahian also perished in the accident.
  4. Nvidia slashed prices in China as part of a chip battle with Huawei and a buildup of inventory. The move follows Beijing encouraging companies to purchase Chinese-made chips. China accounted for 17% of Nvidia’s 2022 revenue.
  5. Tesla cut production of the Model Y at its Shanghai plant by double-digits as demand softens. Tesla has manufactured 287,000 Model Y and Model 3 vehicles in China year-to-date, down 5% from the same period last year.
  6. Chinese e-commerce giant Alibaba plans to issue $4.5 billion in bonds to finance share buybacks, mimicking a similar move by rival JD.com. The 7-year convertible senior notes will have a 0.5% coupon.
  7. Electric vehicle maker Polestar, based in Sweden, received a delisting warning from the Nasdaq and has 60 days to present a compliance plan. Polestar is also working to submit its 2023 annual report and Q1 2024 results.

Commodities & Crypto

Oil prices resumed their downtrend. The Federal Reserve meeting minutes dampened crude prices, revealing that many US central bankers favor a “wait-and-see” approach to further rate hikes. This signals muted oil demand growth. The unexpected rise in weekly US stockpiles also pressured prices. Brent crude is approaching the $80 per barrel level. Sustained weakness could spur OPEC+ to maintain its production cuts through year-end to bolster prices. WTI crude is hovering around $76.30.

Has the copper rally fizzled out? After notching an all-time high above $11,000 per tonne, the global economic bellwether is on track to finish the week lower at $10,417 on the London Metal Exchange. A stronger US dollar and uneven Chinese demand data suggest the stars are no longer aligned for copper’s uptrend to persist. Copper is still up about 20% year-to-date. The greenback’s appreciation has also impacted precious metals. Gold, which is additionally pressured by higher bond yields, has pulled back to $2,337 per ounce.

On Thursday evening, the Securities and Exchange Commission (SEC) approved the creation of Ethereum Spot ETFs. The SEC greenlit a rule change enabling exchanges to list ETFs tied to the price of ether (ETH). However, these products won’t immediately start trading. The SEC still needs to approve a separate filing requiring ETF sponsors to disclose key details about their offerings to investors. Nonetheless, it’s now clear that Ethereum Spot ETFs are on track to launch, joining the Bitcoin Spot ETFs that debuted on January 11, 2024. There is speculation that an influx of Wall Street money could propel ether to new heights once these ETFs begin trading, similar to what happened with bitcoin earlier this year. For now, ether has rallied over 20% since Monday to nearly $3,700. The largest cryptocurrency, bitcoin, is up 1.30% to around $67,000.


All eyes will be on Friday’s personal income and spending report, which includes the Federal Reserve’s preferred inflation metric – the core PCE price index. With uncertainty around the timing of rate cuts halting the stock market’s advance this week, the core PCE reading has the potential to sway investor sentiment. Inflation data will also be released by several European nations and Japan.

First-quarter earnings season is winding down, but a handful of notable companies have yet to report. Headlining the slate are warehouse retailer Costco (COST), which notched a record high in its last session, and Dow component Salesforce (CRM).

The crypto space will be in focus as the marquee CoinDesk Consensus conference kicks off on Wednesday. The major industry gathering will feature appearances by independent presidential candidate Robert F. Kennedy Jr. and famed investor Cathie Wood of ARK Investment Management.

Actionable Takeaways

  1. Consider investing in tech and AI-related stocks, particularly in the semiconductor sector. The strong earnings and outlook from NVIDIA (NVDA) and the surge in the PHLX Semiconductor Index (SOX) suggest this sector may continue to outperform. However, be mindful of potential consolidation in the broader market.
  2. Monitor the antitrust lawsuit against Live Nation and Ticketmaster. If the DOJ succeeds in breaking up the company, it could create investment opportunities in the live entertainment industry as competition increases. However, the uncertainty surrounding the case may also pose risks for investors in the short term.
  3. Keep an eye on the retail sector, as mixed earnings reports suggest a need for selectivity when investing in retail stocks. Focus on companies with strong fundamentals and the ability to navigate the current economic environment.
  4. Consider investing in companies that are benefiting from the growing demand for weight loss treatments, such as Hims & Hers Health (HIMS). The company’s new low-cost GLP-1 alternative could disrupt the market and drive growth.
  5. Be cautious about investing in the real estate sector, as elevated mortgage rates and weak new home sales data suggest ongoing challenges. However, the long-term outlook for real estate remains positive, so investors may want to look for opportunities to buy quality real estate assets at attractive valuations.
  6. Monitor developments in the cryptocurrency market, particularly the approval of Ethereum Spot ETFs by the SEC. While the launch of these ETFs could drive increased institutional investment and potentially boost Ethereum prices, the crypto market remains highly speculative and volatile. Investors should exercise caution and only allocate a small portion of their portfolio to cryptocurrencies.
  7. Diversify your portfolio across sectors and asset classes to manage risk. While the tech and AI sectors may be outperforming, it’s important to maintain a balanced portfolio that includes defensive sectors like healthcare and consumer staples, as well as fixed income and alternative investments.
  8. Keep an eye on inflation data, particularly the core PCE price index, as it could influence the Federal Reserve’s decision on interest rates. If inflation remains elevated, it could lead to further rate hikes and market volatility. Investors may want to consider inflation-protected securities or other investments that can hedge against inflation risk.
  9. Stay informed about geopolitical developments, such as the situation in Iran and the ongoing tensions between the US and China. These events can have significant impacts on global markets and create both risks and opportunities for investors.
  10. Finally, maintain a long-term perspective and avoid making impulsive decisions based on short-term market movements. Stick to your investment strategy and regularly review and rebalance your portfolio to ensure it aligns with your goals and risk tolerance.
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