Despite the record high Dow Jones Industrial Average close on Monday, tech stock led by semiconductor giant Nvidia fell by 2.3%. This dip comes days before Nvidia’s earnings report, which has Wall Street buzzing for another bull run in the market. Competing chip stocks, such as Broadcom and Micron, also fell in unison.
Ross Mayfield, a Baird analyst, told CNBC that “there’s a little angst in the technology sector about the upcoming Nvidia earnings.” According to Baird, “the market is in a pretty healthy place, but it is really hard to make big advances higher if tech is a laggard—it’s just too big of a weight in the index—and right now, it is acting like a laggard.” When notable small-cap stocks overtook Wall Street’s ‘Magnificent 7’ on Friday as the market, traders began to park their funds in other profitable bundles, such as the S&P 500 energy sector, which was up more than 1%.
The Dow continues to soar in anticipation of the rate cuts in September, as alluded to by Fed Chairman Jerome Powell on Friday at Jackson Hole. Additionally, investors are pushing fiercely for digital assets such as Bitcoin, which rose past $64,000 from former $50,000 levels seen earlier this month. Several analysts are calling the waning of the ‘Magnificent 7’ as a pronounced market lag. Craig Johnson, chief market technician, informed clients that “this [dip] further proved that the ‘Mag Seven’ is becoming the ‘Lag Seven’ as market participation broadens on this recovery rally.” The Bank of America states that looming tensions in the market due to Nvidia’s Wednesday earnings report could be a primary driver of these damp market projections from Big Tech.
