US stock indices ended Wednesday’s session mixed. The Dow outperformed once again, adding 0.7% to take it to yet another all-time high. The S&P 500 eked out a more modest 0.1% gain, while both the NASDAQ and Russell 2000 lost 0.3%. The blue-chip, old school, price-weighted Dow continued its strong run as investors rotated out of tech and into value and defensive sectors, with healthcare once again in demand.
This offset some weakness across growthy tech names. The NASDAQ has lost some of its upside momentum recently, weighed down by wariness over stretched valuations and the circularity of investment across the Artificial Intelligence (AI) space. Nvidia has been a particular focus. The chip designer has been at the forefront of the march to Artificial General Intelligence (AGI), with its complex chips an integral part of its development.
Source: TN Trader
It was the first company in history to hit a market capitalisation of $5 trillion. But its share price has taken a bit of a knock over the past fortnight, and its market cap has fallen back to $4.7 trillion, which still makes it the most valuable company in the world.
Investors became net sellers after it was revealed that Michael Burry, who anticipated the housing bust which triggered the Great Financial Crisis of 2008/9, announced that he had large short positions in both Nvidia and Palantir, another great favourite with tech traders.
Suddenly, cracks appeared in the AGI trade. This was exacerbated after Japan’s SoftBank announced that it had liquidated its entire Nvidia position. Nerves were settled to some extent as SoftBank only sold out of Nvidia to increase its exposure to OpenAI, owner of ChatGPT.
Nevertheless, it’s important to keep a close eye on what happens next. A protracted break of support (previously significant resistance) around $183.50, could indicate a souring of investor risk appetite.
