📈 Why did Nvidia Nosedive?

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Good Morning!

U.S. stock index futures like the Dow Jones, S&P 500, and Nasdaq 100 all ticking upward as the new week begins after a rough few weeks.

On Friday, Nvidia had a startling 10% fall—a surprising twist given the absence of new drama from the company itself. Plus, Bitcoin's latest 'halving' event took place over the weekend, which has slowed the production rate of new coins by 50% and spurred a price jump, though not quite the explosion some were expecting.

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Markets

Nvidia dragged to worst day since March 2020 after Super Micro plunge (2 minute read)
Nvidia's stock took a 10% nosedive on Friday, marking its roughest day since the chaos of March 2020. Back then, the company's worth was a fraction of its current mammoth $1.9 trillion market cap. Interestingly, the plunge didn't follow any immediate drama from Nvidia itself. Instead, it appears linked to a tumble in Super Micro Computer's shares, which tanked 23% after the company deviated from its usual practice of sharing preliminary results ahead of its full earnings report.

Super Micro, known for crafting Nvidia-based servers, has opted to reveal its fiscal third-quarter performance later this month, a shift that has raised eyebrows considering its January spike in sales and earnings forecasts. Amidst this financial turbulence, both Nvidia and Super Micro found themselves at the bottom of the S&P 500’s performance list on Friday. Despite the current market frenzy, competitors like Dell and Hewlett Packard Enterprise are gearing up to leverage Nvidia’s latest tech in their systems, heating up the race even more.

US stock futures rise; tech earnings and key inflation data in focus (3 minute read)
Wall Street's starting the week on a positive note, shaking off recent tech tremors with U.S. stock index futures pointing up. As of early Monday morning, the Dow Jones Futures, S&P 500, and Nasdaq 100 all edged higher, trying to rebound from a double-whammy of tech sector weakness and dimmed hopes for near-term interest rate cuts.

Last week was brutal for tech stocks with the S&P 500 and NASDAQ Composite dropping 3.5% and 6.1% respectively, thanks largely to persistent inflation fears pushing expected rate cuts further down the calendar. In contrast, the Dow managed to mostly hold steady.

Now, all eyes are on some of Wall Street’s heaviest hitters in tech with quarterly earnings on deck. Tesla, Meta Platforms, Microsoft, and Alphabet are all scheduled to report this week, potentially setting the tone for market recovery or further declines. Meanwhile, geopolitical tensions and economic indicators linger in the background, with crude oil prices slipping amid stabilizing concerns in the Middle East and expectations for OPEC+ to ramp up output this summer.

Bitcoin Starts Week on High Note Above $65,000 After Halving Event Wraps Up (2 minute read)
Bitcoin just had its 'halving' moment this weekend, cutting down the pace of new Bitcoin creation by 50%. This big crypto milestone—which pops up roughly every four years—slices the reward for mining Bitcoin from 6.25 BTC to a trimmer 3.125 BTC per block. 

Despite the buzz, the expected explosion in Bitcoin prices hasn't quite materialized yet. Post-halving, Bitcoin prices did hop from a Friday low under $60,000 to hover between $65,000 and $67,000 early Monday, marking a decent uptick over 10%. Still, it's not the massive surge some crypto enthusiasts were hoping for. It’s likely too early to tell, with previous halvings not having an immediate impact on price.

Investing

Up 8% This Year, Why Is Costco Stock Outperforming? (3 minute read)
Costco has been cruising through 2023, with its shares up 8% for the year, ticking at about $716 each—a price that seems just right. The stock's climb from $650 to $720 this year has outpaced the S&P 500's 6% growth, showing off Costco's knack for driving revenue and enhancing customer experiences amidst a shifting retail scene.

Not only is it expanding domestically, but it’s also eyeing growth in China and beyond. Looking back to January 2021, Costco shares have surged a solid 90% from $375 to $715, massively outdoing the S&P 500’s 35% rise over the same span. Yet, it’s been a rollercoaster: a stellar 51% rise in 2021, a 20% drop in 2022, and bouncing back with a 45% boost in 2023. Despite a tough year in 2022 when it lagged behind the broader market, Costco’s overall trajectory shows resilience in the face of global upheavals like the pandemic and rising inflation.

Why Shell Has Soured on The London Stock Exchange (4 minute read)
Shell Plc is hinting at a major move from the London Stock Exchange to the New York Stock Exchange, driven by CEO Wael Sawan’s frustration with how London investors undervalue the company. Despite geopolitical upheavals boosting oil prices to near-record highs, and Shell’s shares hitting £28.51, the appreciation just isn't there. Sawan is irked by the lack of recognition for Shell’s financial performance and the heavy taxation by the British government.

Meanwhile, the company is also focusing on greener ventures, investing 20% of its cash in low-carbon assets—far outpacing Exxon’s 2%. In a broader trend, Europe is seeing its green tech industries, like solar and battery companies, relocate to the U.S. for better support, exemplified by Meyer Burger winding down in Germany and Freyr ditching plans near the Arctic for the U.S. This wave of corporate migration highlights a growing divide in how different regions value and support energy sectors.

Have bond yields peaked? This week will provide answers (3 minute read)
Investors are buckling up for a potentially rough ride this week. On top of ongoing Middle East tensions stirring the market pot, a hefty $183 billion worth of Treasury notes are set to hit, marking record sales for the two- and five-year notes. This deluge comes just as everyone's eyes are peeled for a critical inflation report due Friday, which could reshape expectations for the Federal Reserve’s next moves.

Despite recent market jitters, there’s a vibe that investors are itching to buy, especially after the two-year Treasury rate briefly broke the 5% ceiling. This spike followed Fed Chair Jerome Powell's hint last week that the Fed isn't too keen on loosening the reins just yet. Now, the 5% mark is becoming a sweet spot for bond managers focusing on short maturities. While rate cuts might not be on the table until the end of 2024, some investors are betting on potential price gains in the new bond issues as subtle shifts in Fed policy could still play to their favor this year.

Money

High Inflation Is Never Good, But Markets Have Been Overreacting (5+ minute read)
The U.S. is grappling with high inflation, a beast it hasn't wrestled with for nearly four decades, leaving individuals and businesses alike floundering in unfamiliar waters. Unlike some countries where high inflation is just another Tuesday, Americans are relatively inexperienced in navigating these choppy financial seas.

While politicians might point fingers at companies for hiking prices, the truth is that high inflation is a menace to businesses too. Sure, some might snag a short-term gain if they play their cards right as prices soar, but get it wrong as inflation eases—and they've been getting it wrong for the last year and a half—and they'll see their market share shrink and their stock prices take a hit. It’s a high-stakes game where timing is everything, and lately, many are missing the mark.

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