Visitors crowd around the Nvidia booth at the 2016 China Digital Entertainment Expo, known as ChinaJoy, in Shanghai.
STR | AFP | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Tech rallied amid rising yields
The Nasdaq Composite rallied Monday, breaking a four-day losing streak, even as the 10-year U.S. Treasury yield hit 4.342%, a decades-long high. However, the Dow Jones Industrial Average fell. Meanwhile, the pan-European Stoxx 600 inched up 0.05%. Auto stocks rose 1.1%, but construction and material stocks dipped 0.6%.
Nasdaq listing for Arm
Arm filed for a Nasdaq listing Monday. The U.K.-based company didn’t provide a projected share price, so its valuation is still unknown. (Japan’s Softbank bought Arm in 2016 for $32 billion.) Arm’s chip designs are found in nearly all smartphones, making it one of the most important companies in the chip industry — and a big deal for the initial public offerings market.
Zoom’s earnings beat
Zoom shares climbed around 4% in extended trading after reporting earnings that beat expectations. The company’s second-quarter revenue grew 3.6% year over year to touch $1.14 billion, while net income jumped from $45.7 million a year ago to $182 million. The video conferencing company also raised its full-year forecast.
High price for jobs
U.S. workers want an annual salary of $78,645 before they’d accept a job, according to the latest New York Federal Reserve employment survey released Monday. That figure’s 8% higher than a year ago and the highest since data was recorded in 2014. It’s a sign that service inflation’s still a concern in the economy even as prices for goods have leveled off.
[PRO] Two reasons not to panic
The S&P 500 has fallen for three straight weeks, making August the worst month since December. But traders aren’t panicking. CNBC Pro’s Bob Pisani gives two reasons why investors are still calm — and one why they should perhaps start worrying.
Yields on U.S. Treasurys continued marching higher, with the benchmark 10-year yield closing at 4.342%, a level not seen since November 2007. The 2-year yield added over 6 basis points to breach the 5% barrier, trading at 5.007%.
“Typically spikes in Treasury yields expose other areas of weakness,” said Megan Horneman, chief investment officer at Verdence Capital Advisors. “This is a risk to tech stocks and growth stocks with high PE multiples.”
It’s true technology stocks are sensitive to a high interest rate environment because their value rests on future earnings. Despite that, tech rallied, making their gains even more striking. The tech-heavy Nasdaq Composite snapped a four-day losing streak to advance 1.6%, its biggest one-day increase since July 28 when it added 1.9%. The S&P 500 tech sector gained 2.26%, helping to push the broader index up 0.69%. However, the Dow Jones Industrial Average slipped 0.11%.
“We’re seeing a positive return in the stock market, [which] we didn’t see last week. We think rates are going to be higher for longer and maybe the stock market’s okay with it,” Katy Kaminski, chief market strategist at AlphaSimplex, told CNBC.
Some individual stock movements of note: Tesla popped 7.33%, Meta rose 2.35% and Nvidia jumped 8.3%. Investors are anticipating Nvidia’s earnings report, which comes out Wednesday after the bell. It’s a crucial moment when we’ll find out whether Nvidia’s revenue forecast — which was 50% higher than Wall Street estimates — comes to fruition.
If it does, expect another surge in its stock and other AI-related firms. More importantly, Nvidia’s report might sway market sentiment again, as it did in May when the chipmaker changed the narrative from woes around inflation and recession to optimism and enthusiasm over AI. Some excitement is exactly what the market needs in a sluggish August.
