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Market Moves Yesterday

S&P 500 @ 5,528.93 ( ⬇️ 2.1%)

Nasdaq Composite @ 17,136.30 ( ⬇️ 3.26%)

Bitcoin @ $56,734.18 ( ⬇️ 3.88%)

Hey Scoopers,

Happy Wednesday! Are you ready for an exciting newsletter?

👉 The Nvidia sell-off intensifies

👉 Berkshire Hathaway reduces BoA stake

👉 All eyes on macroeconomic data

So, let’s go 🚀

Market Wrap

All three major equity indices tumbled yesterday as tech names struggled and new economic data rekindled recession fears.

Nvidia led the sell-off, falling over 9%, while peer chip stocks such as Micron and Advanced Micro Devices also reported declines. In fact, the VancEck Semiconductor ETF slid over 7%, reporting its worst day in two years.

The stock market initially moved lower after two manufacturing production readings showed signs of weakness.

The ISM manufacturing index came in at 47.2%, below estimates of 47.9%. The gauge measures the percentage of companies reporting expansion, so a reading below 50% indicates contraction.

Next, the employment index ticked higher but was still in pullback territory at 46%. Finally, measures for new orders and supplier deliveries fell, and inventories moved higher.

Trending Stocks 🔥

United States Steel - The industrial stock fell over 6% after Vice President Kamala Harris opposed the planned sale of the company to Japan’s Nippon Steel.

Unity Software - The video game maker rose over 2% after Morgan Stanley upgraded the stock to “overweight” from “equal weight”.

Boeing - Shares of the aircraft maker slipped 7% after Wells Fargo downgraded the stock to “underweight” from “equal weight”.

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Nvidia Stock in Free Fall

A month after U.S. stocks buckled due to a global flight from risk assets, chipmakers have led another sell-off after industry analysts expressed fears that the artificial intelligence mania had gone too far.

Shares of market bellwether Nvidia fell 9.5%, wiping out $278.9 billion in market cap, the biggest loss of value ever for a U.S. company. The previous record was held by Facebook-parent Meta, which lost $232 billion in a single session back in February 2022.

Nvidia stock has slipped 14% in the last three trading sessions after it reported earnings that did not meet lofty expectations.

The chip stock is down over 2% in pre-market trading today after a Bloomberg report stated that the U.S. Justice Department sent subpoenas to Nvidia as it seeks evidence of antitrust law violations.

According to JPMorgan Asset Management, AI spending will only be justified when demand for AI services increases outside big tech companies.

Several giants, including Alphabet, Microsoft, Meta, Tesla, Amazon, and Apple, are investing heavily in widening AI capabilities. However, these investments have yet to translate into revenue growth for these companies.

Warren Buffett Reduces BoA Stake

Warren Buffett has added $6 billion to Berkshire Hathaway’s already sizeable cash pile with a string of Bank of America stock sales in the last few months.

According to a new SEC filing, Berkshire sold 21.1 million BoA shares in three days last week, totaling $848.2 million, indicating an average selling price of $40.24.

To date, Berkshire has reduced its Bank of America holdings by 14.5%, selling 150.1 million shares of $6.2 billion at an average selling price of $41.33.

Bank of America is still among Berkshire’s largest equity holdings, accounting for 11% of its portfolio as the conglomerate owns 882.7 million BoA shares worth $36 billion.

Does the Oracle of Omaha think the stock is overvalued, or is he concerned about the health of the banking sector? With a cash pile of $277 billion, Berkshire has enough dry powder to buy quality beaten-down stocks if valuations correct significantly from current levels.

Key Economic Data Releases

A raft of economic data is due this morning, which includes:

• The U.S. trade deficit, the difference between exports and imports, is expected to widen to $79.1 billion in July, up from $73.11 billion in June.

• The latest job opening and labor turnover (JOLTS) survey, which measures the labor market's health, is expected to show a decline in job openings. Economists expect job openings to fall to 8.1 million in July, down from 8.2 million in June.

• Factory orders data measures the value of goods ordered by factories, and it is forecasted to have spiked by 5% in July, up from a 3.3% decline in June.

Headlines You Can't Miss!

Mortgage refinance demand is up 94%

Qualcomm launches new AI chip for PCs

Robinhood launches stock lending for UK customers

Japan’s Nikkei sees worst sell-off since August

Total crypto market falls below $2 trillion as selling pressure intensifies

Chart of The Day

Quarterly capital expenditure spending for hyperscalers such as Microsoft, Meta, Google, and Amazon have risen by 54% year over year to $52 billion in Q2, marking the first quarter of a multi-year AI investment cycle.

Meme of the Day

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DISCLAIMER: None of this is financial advice. The newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.