Big tech drives markets lower

General market commentary

Equity markets in the United States experienced a sharp sell-off yesterday, driven largely by declines in major technology names such as Nvidia and Meta. The Nasdaq Composite dropped 1.5% in its worst session since early August, while the S&P 500 shed 0.6%, though the Dow Jones Industrial Average held flat. Notably, performance was stronger outside of the mega-cap technology shares, with more than 300 S&P 500 constituents posting gains and the equal-weighted index finishing higher. Real estate led sector gains, while technology lagged, weighed down by steep losses in Nvidia, Palantir and AMD. By contrast, Intel jumped 7% after announcing a $2 billion equity investment from Japan’s SoftBank. Meanwhile, retailer Home Depot rose on the Dow after reaffirming guidance, though results highlighted continued pressure from cautious consumers.

Broader market sentiment was supported by falling government bond yields and optimism in Europe around potential progress in Russia-Ukraine peace talks. In the US, 10-year Treasury yields slipped to 4.31% amid softer economic data and expectations that the Federal Reserve could begin cutting rates as early as September, with markets currently pricing in an 85% chance of a 25 basis point move. Oil prices fell as traders weighed the implications of any peace deal for Russian supply, while the US dollar strengthened against a basket of peers. Looking ahead, investor focus will turn to this week’s Jackson Hole symposium, where Fed Chair Jerome Powell may offer hints on the policy outlook, though with key inflation and jobs data still pending, strong signals appear unlikely.

Latest market and economic update

Asian equities traded mostly flat-to-lower on Wednesday, with technology shares sliding in line with Wall Street weakness. Japan’s Nikkei and South Korea’s KOSPI led declines, pressured by poor trade data and rate uncertainty. Conversely, Chinese indices gained on sector rotation and steady PBOC policy, while Australian and Singaporean shares rose. Hong Kong also slipped.

US equity futures slipped overnight ahead of closely watched retail earnings and the release of Federal Reserve minutes. Nasdaq 100 futures fell 0.3%, with tech under pressure, while S&P 500 and Dow futures edged 0.2% and 0.1% lower. Investors are also awaiting results from Lowe’s, Target, and TJX Companies scheduled for later today.

European equities closed at their highest since March on Tuesday, lifted by optimism over potential progress towards ending the Russia-Ukraine war. The STOXX 50 gained 0.9% and the STOXX 600 rose 0.7%. Consumer discretionary shares led advances, with LVMH, Kering, Stellantis, and Mercedes Benz rallying, while defence names including Rheinmetall, BAE Systems, and Thales fell sharply.

The dollar index climbed above 98.3 on Wednesday, marking a third straight gain as traders awaited Fed minutes and Powell’s Jackson Hole remarks for policy signals. Markets price an 85% chance of a September rate cut, yet the greenback advanced broadly. EUR/USD slipped, with the pair currently trading at 1.1634, reflecting euro weakness.

Oil prices edged higher in Asian trade after API data showed a larger-than-expected 2.4 million-barrel drop in US crude inventories. Brent rose 0.4% to $66.02 and WTI gained 0.3% to $61.94. Gains followed Tuesday’s losses, as markets balanced tighter US supply with uncertainty over Russia-Ukraine peace talks and potential sanctions relief.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

The U.S. government is considering taking equity stakes in semiconductor firms receiving CHIPS Act subsidies, including Intel, Micron, TSMC, and Samsung, in exchange for billions in grants. This historic policy shift would give Washington direct influence over companies critical to national security. Talks on a potential 10% Intel stake are already confirmed.

Nvidia is developing a new AI chip for China, based on its Blackwell architecture, that will be more powerful than the current H20 model. Tentatively called the B30A, it uses a single-die design and high-bandwidth memory. Deliveries could begin next month, pending U.S. regulatory approval amid ongoing concerns over technology access and national security.

Robinhood has launched pro and college football prediction markets on its app via the Prediction Markets Hub, covering all regular-season pro games and Power 4 college matchups. Unlike traditional betting, users trade contracts like financial instruments, managing positions in real-time. The rollout builds on over 2 billion contracts already traded since last year.

Novo Nordisk and Eli Lilly shares rose after Viking Therapeutics’ Phase 2 oral obesity trial met its primary endpoint, with VK2735 patients losing up to 12.2% body weight. However, a 28% discontinuation rate and mild-to-moderate side effects raised concerns. Analysts noted Viking trails Eli Lilly, highlighting competitive pressure in the oral obesity market.

Elon Musk is reportedly scaling back plans to launch his “America Party,” instead prioritising his businesses and maintaining ties with key Republicans such as Vice President JD Vance. The move eased concerns among Tesla shareholders, who feared political distractions. Tesla shares pared earlier aftermarket losses, trading down 0.7% after initially falling 1.5% following the report.

Evercore ISI upgraded Caterpillar to Outperform, citing strong margins, pricing resilience, and North American inventory stabilisation supporting EPS upside. Power generation and data centre exposure add appeal. Analyst day and earnings guidance offer more visibility, though warranty accounting remains a concern.

William Blair initiated coverage of Thermo Fisher Scientific with an Outperform rating, citing its dominant role in biopharma services and growth potential through acquisitions. Strong lab products, expanding proteomics, and M&A capabilities support long-term demand, though near-term biopharma softness and exposure risks remain.

Upcoming data and events

Today markets’ focus shall be on Fed minutes, EIA crude inventories, and earnings from Lowe’s, Target, Estee Lauder, and Baidu, while in Europe attention shall be on Germany’s PPI and Eurozone inflation.

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