Stocks struggled for direction amid Wall Street’s quarter-end positioning, with a slide in chipmakers offsetting gains in other technology groups.
(Bloomberg) — Stocks struggled for direction amid Wall Street’s quarter-end positioning, with a slide in chipmakers offsetting gains in other technology groups.
The mixed performance in the S&P 500’s most-influential industry came on the heels of a blistering artificial-intelligence rally that put the Nasdaq 100 on pace for its best-ever first half of a year. Nvidia Corp., which has almost tripled in 2023, dragged down fellow semiconductor firms on concerns about an eventual tightening in chip-export restrictions. Meantime, giants like Tesla Inc., Apple Inc. and Google’s parent Alphabet Inc. climbed.
Traders also weighed Jerome Powell’s remarks as the Federal Reserve’s boss downplayed the odds of a recession while signaling officials could hike for two straight meetings, if needed. Swap market bets on further tightening this year barely budged. Treasury two-year yields, which are more sensitive to imminent Fed moves, dropped four basis points to 4.7%. The dollar climbed.
With the Fed set to disclose the results its stress test later Wednesday, traders took a more cautious stance on the financial industry. While analysts don’t expect any huge negative surprises, a gauge of banks fell. Several executives have recently tempered shareholder expectations regarding dividend increases and stock buybacks — which had been the focus of investors in previous years.
Quarter-End Positioning
“Quarter-end positioning could drive volatility through the end of the week,” said Mark Hackett, chief of investment research at Nationwide. “Investors are increasingly pricing in a soft landing. A reacceleration in earnings will be required to drive the next phase of the market move.”
Mutual funds bought stocks for the first time since February in the past month as fear of missing out outweighed economic concerns, according to Barclays Plc strategists. Still, this hasn’t changed the bigger year-to-date picture of investors mainly flocking to safe assets, they said.
Meantime, BlackRock Inc. just introduced a bullish call on AI as it latches onto the promise of productivity gains from artificial intelligence.
“A mega force like AI can be a big driver of returns even when the macro environment is not your friend,” wrote strategists including Jean Boivin, Wei Li and Vivek Paul. “A longer-term investor can look past some of the near-term pain.”
In other corporate news, General Mills Inc. fell after the food producer gave a guidance that suggests price hikes will no longer make up for slowing sales as inflation-weary shoppers cut back on spending. Netflix Inc. gained as Oppenheimer raised its price target.
Elsewhere, oil rose after a US government report showed nationwide stockpiles fell the most in two months, outpacing market expectations.
Key events this week:
- Eurozone economic confidence, consumer confidence, Thursday
- US GDP, initial jobless claims, Thursday
- Atlanta Fed President Rafael Bostic speaks, Thursday
- China manufacturing PMI, non-manufacturing PMI, balance of payments, Friday
- US personal income and spending, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 was little changed as of 2:17 p.m. New York time
- The Nasdaq 100 rose 0.2%
- The Dow Jones Industrial Average fell 0.3%
- The MSCI World index rose 0.1%
Currencies
- The Bloomberg Dollar Spot Index rose 0.4%
- The euro fell 0.4% to $1.0921
- The British pound fell 0.8% to $1.2652
- The Japanese yen fell 0.1% to 144.28 per dollar
Cryptocurrencies
- Bitcoin fell 1.5% to $30,195.83
- Ether fell 2.3% to $1,849.42
Bonds
- The yield on 10-year Treasuries declined six basis points to 3.71%
- Germany’s 10-year yield declined four basis points to 2.32%
- Britain’s 10-year yield declined six basis points to 4.32%
Commodities
- West Texas Intermediate crude rose 2.9% to $69.64 a barrel
- Gold futures were little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Brett Miller, Tassia Sipahutar, Sujata Rao and Denitsa Tsekova.
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