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Nasdaq eyes lower open as Nvidia, chips drag; inflation data in focus

Published 2024/06/24, 12:28
Updated 2024/06/24, 15:09
© Reuters. FILE PHOTO: People walk around the Financial District near the New York Stock Exchange (NYSE) in New York, U.S., December 29, 2023. REUTERS/Eduardo Munoz/File Photo

By Ankika Biswas and Lisa Pauline Mattackal

(Reuters) - The Nasdaq was set to open lower on Monday after Nvidia (NASDAQ:NVDA) and other chip stocks remained under selling pressure, with investors on tenterhooks as a key inflation print this week could further shape bets over the timing and quantum of rate cuts.

AI chip leader Nvidia dropped 2.3% premarket following a near 7% slide over the past two sessions after briefly becoming the world's most valuable company last week.

"Nvidia has run incredibly fast and hard since the (stock) split. I don't think that the price rise was merited by fundamentals, so the price falling doesn't really mean anything either," said Kim Forrest, chief investment officer at Bokeh Capital Partners.

Some other semiconductor stocks including Arm Holdings (NASDAQ:ARM), Qualcomm (NASDAQ:QCOM), U.S.-listed shares of Taiwan Semiconductor Manufacturing and Applied Materials (NASDAQ:AMAT) were down between 1% and 2%.

The biggest event on investors' radar for the week is Friday's personal consumption expenditures (PCE) price index report- the Federal Reserve's preferred measure of inflation, expected to show a moderation in price pressures.

"The PCE could drive the market higher if it's even a little bit lower than anticipated ... The Fed has every reason to try to cut, but they don't really want to talk about it because they need to be tough on inflation" Forrest added.

Market participants are still expecting about two rate cuts this year, pricing in an over 60% chance of a 25-basis-point cut in September, as per LSEG's FedWatch.

The data comes against the backdrop of investors weighing the moderation in recent inflation data against the Fed's latest projection of one rate cut likely in December.

Investors also awaited remarks from Fed voting committee member and San Francisco President Mary Daly during the day, in light of the narrative of higher-for-longer interest rates maintained by several Fed policymakers.

The S&P 500 posted its third straight weekly gain and the blue-chip Dow its strongest weekly performance in six in the previous week, which saw simultaneous expiration of stock and index derivative contracts, quarterly S&P 500 rebalancing and mixed economic data.

The other events lined up for the week include durable goods, weekly jobless claims and final first-quarter GDP figures, along with quarterly earnings from the likes of FedEx (NYSE:FDX), Micron Technology (NASDAQ:MU) and Walgreens Boots Alliance (NASDAQ:WBA).

Further, President Joe Biden will debate rival Donald Trump in Atlanta on Thursday, with both neck-and-neck in national opinion polls, as a considerable slice of the electorate remains undecided over four months before the Nov. 5 vote.

At 8:34 a.m. ET, Dow e-minis were up 81 points, or 0.2%, S&P 500 e-minis were down 1.75 points, or 0.03%, and Nasdaq 100 e-minis were down 53.25 points, or 0.27%.

Under Armour (NYSE:UAA) dropped 1.6% after the sports apparel maker agreed to pay $434 million to settle a 2017 class action lawsuit over sales disclosures.

© Reuters. FILE PHOTO: People walk around the Financial District near the New York Stock Exchange (NYSE) in New York, U.S., December 29, 2023. REUTERS/Eduardo Munoz/File Photo

Respiratory device maker ResMed slumped 9.6% after Eli Lilly (NYSE:LLY) said its popular weight-loss drug Zepbound helped resolve moderate-to-severe obstructive sleep apnea in up to 52% of patients in two late-stage trials.

Affirm Holdings (NASDAQ:AFRM) rose 3.4% after a report that Goldman Sachs assumed coverage of the buy now, pay later firm with a "buy" rating.

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