Wall Street Morning Report: Nvidia Falls for 7 Consecutive Days, AI Stocks Continue to Bleed Out; U.S. Treasury Buybacks Criticized as Temporary Fix, Inflation and Deficit Are the Real Big Problems
Wall Street Morning Report: Tech and Treasury Tensions
U.S. stocks were mixed. The Dow gained 0.26%, supported by defensive and consumer staples stocks, while the S&P 500 fell 0.28% and the Nasdaq dropped 0.76% amid a sell-off in AI hardware.
The U.S. announced new sanctions targeting Iran's key economic sectors, temporarily easing oil prices (Brent -2.35%). However, concerns over potential disruption to the Strait of Hormuz could pressure European natural gas prices. Meanwhile, the Treasury's upcoming bond buyback plan faced criticism from major banks (Goldman Sachs, Deutsche Bank, Citadel), who argue it doesn't address the root causes of high long-term yields: persistent inflation and the massive fiscal deficit. The 10-year Treasury yield dipped slightly to around 4.70%. Gold rose, with Citi raising its short-term target to $4,800/oz.
The AI hardware and semiconductor sector saw intense selling. The Philadelphia Semiconductor Index fell nearly 3%. NVIDIA dropped 2.91%, marking its seventh consecutive daily decline—its longest losing streak since 2022—due to pre-earnings caution despite strong analyst estimates. Memory chip stocks (Micron -6%, others down 5-6%) fell after Samsung's shareholder returns disappointed, raising cycle peak fears. Optical communications was also a big loser, led by Applied Optoelectronics (-14%) on equity dilution concerns. Wall Street is growing wary of off-balance-sheet credit risks in AI infrastructure financing.
In other moves, Tesla fell 3.83% on a major China recall. Meta rose 1.66% on news of its upcoming "Hatch" AI platform. Defensive stocks like Visa and Walmart supported the Dow.
Key upcoming events include the Jefferies Semiconductor Conference (Aug 25-26), Gamescom (Aug 26-30), and NVIDIA's earnings report (Aug 28).
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