Slump By Nvidia May Lead To Pullback By Nasdaq

The major U.S. index futures are currently pointing to a mixed open on Monday, with the Dow futures up by 0.1 percent but the Nasdaq futures down by 0.2 percent.

A decrease by shares of Nvidia (NVDA) may weigh on the Nasdaq, as the AI darling is slumping by 2.1 percent in pre-market trading.

The drop by Nvidia comes amid news a Chinese regulator has launched an investigation into whether the chipmaker violated the country’s antimonopoly laws.

Overall trading activity may be somewhat subdued, however, as traders look ahead to the release of closely watched inflation data later in the week.

Reports on consumer and producer price inflation, which are due to be released on Wednesday and Thursday, respectively, could impact the outlook for interest rates.

While the Federal Reserve is widely expected to lower rates by another 25 basis points next week, there is some uncertainty about whether the central bank will continue cutting rates early next year.

The major U.S. stock indexes all moved to the upside early in the session on Friday but turned mixed over the course of the trading day. While the Nasdaq and the S&P 500 managed to remain in positive territory and reach new record closing highs, the narrower Dow pulled back into negative territory.

The tech-heavy Nasdaq ended the session near its best levels of the day, climbing 159.05 points or 0.8 percent to 19,859.77. The S&P 500 also rose 15.16 points or 0.3 percent to 6,090.27, but the Dow fell 123.19 points or 0.3 percent to 44,642.52.

The major averages also turned in a mixed performance for the first week of December. The Dow slid by 0.6 percent, while the S&P 500 jumped by 1.0 percent and the Nasdaq surged by 3.3 percent.

The Dow pulled back further off the record closing high set on Wednesday amid a continued slump by shares of UnitedHealth (UNH).

UnitedHealth tumbled by 5.1 percent, adding to the 5.2 percent drop seen on Thursday on the heels of Wednesday’s fatal shooting of UnitedHealthcare CEO Brian Thompson.

Meanwhile, the Nasdaq and the S&P 500 benefited from a positive reaction to a closely watched Labor Department report showing employment in the U.S. surged by more than expected in the month of November.

The Labor Department said non-farm payroll employment shot up by 227,000 jobs in November after rising by an upwardly revised 36,000 jobs in October.

Economists had expected employment to jump by 200,000 jobs compared to the uptick of 12,000 jobs originally reported for the previous month.

Meanwhile, the report said the unemployment rate crept up to 4.2 percent in November from 4.1 percent in October. The modest increase matched economist estimates.

The uptick by the unemployment rate increased confidence the Federal Reserve will lower interest rates by another 25 basis points later this month.

“Despite the strong headline number this morning, the Fed is likely to note the overall slowing in the job market and cut rates by 25 bps in 2 weeks, unless the next CPI report is white hot,” said Chris Zaccarelli, Chief Investment Officer, Northlight Asset Management.

He added, “Given the positive backdrop of strong economic growth, a healthy labor market, and inflation that is relatively contained, the Fed can keep cutting rates and that should allow the bull market to run into the end of the year and into early next year.”

In other U.S. economic news, the University of Michigan released a report showing consumer sentiment in the U.S. has improved by slightly more than anticipated in the month of December.

The University of Michigan said its consumer sentiment index climbed to 74.0 in December from 71.8 in November. Economists had expected the index to rise to 73.0.

However, the report also said year-ahead inflation expectations jumped to 2.9 percent in December from 2.6 percent in November, reaching a six-month high.

Computer hardware stocks turned in some of the market’s best performances on the day, with the NYSE Arca Computer Hardware Index jumping by 2.1 percent to its best closing level in well over four months.

Hewlett Packard Enterprise (HPE) helped lead the sector higher, spiking by 10.6 percent after Citigroup upgraded its rating on the company’s stock to Buy from Neutral.

Considerable strength was also visible among retail stocks, as reflected by the 1.8 percent gain posted by the Dow Jones U.S. Retail Index.

On the other hand, oil service stocks moved sharply lower, resulting in a 3.5 percent nosedive by the Philadelphia Oil Service Index.

Oil producer stocks also came under pressure amid a decrease by the price of crude oil, while notable weakness also emerged among natural gas, steel and gold stocks.

Commodity, Currency Markets

Crude oil futures are jumping $0.93 to $68.13 a barrel after slumping $1.10 to $67.20 a barrel last Friday. Meanwhile, after rising $11.20 to $2,659.60 an ounce in the previous session, gold futures are climbing $20.40 to $2,680 an ounce.

On the currency front, the U.S. dollar is trading at 150.78 yen versus the 150.03 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0571 compared to last Friday’s $1.0568.

Asia

Asian stocks retreated on Monday, as Chinese inflation data signaled continued demand weakness and political turmoil continued in South Korea after President Yoon survived impeachment.

Japanese markets outperformed to end slightly higher after Q3 GDP was revised higher, testing bets on a December Bank of Japan rate hike.

The U.S. dollar started the week on a firm note as Syrian rebels seized the capital Damascus unopposed on Sunday in historic turn of events, bringing an abrupt end to President Bashar al-Assad’s 13-year rule and the six-decade-long dominance of the Assad family.

Oil and gold prices edged higher in Asian trading due to rising tensions in the Middle East.

China’s Shanghai Composite Index finished marginally lower at 3,402.53 as weak inflation readings underscored the need for more drastic stimulus measures. Hong Kong’s Hang Seng Index closed up 2.8 percent at 20,414.09 after a late surge.

Chinese consumer price inflation unexpectedly eased to a five-month low in November and producer prices decreased for the 26th consecutive month, suggesting that the sequence of stimulus measures initiated by Beijing had limited impact on reviving domestic demand.

Japanese markets rose slightly as data revealed GDP grew in July-September at a faster pace than initially reported due to upward revisions in capital investment and exports.

The Nikkei 225 ndex closed up 0.2 percent at 39,160.50 after a choppy session. The broader Topix Index settled 0.3 percent higher at 2,734.56.

AI-focused startup investor SoftBank Group and Uniqlo parent firm Fast Retailing both gained around 2 percent.

Rakuten Group surged 6.7 percent after the e-commerce company announced a shareholder benefits program. Chip-related shares declined, with Advantest falling 4.7 percent.

Seoul stocks led regional losses after Yoon survived an impeachment vote in parliament and a defense ministry spokesman said he still is commander in chief, deepening a leadership crisis.

The Kospi tumbled 2.8 percent to 2,360.58 despite the country’s financial authorities pledging to support the won and the country’s financial markets. Automakers Hyundai Motor and Kia Corp. fell 1.2 percent and 3 percent, respectively.

Australian markets ended on a flat note as investors awaited the Reserve Bank of Australia’s rate decision. Miners and banks led losses, with Fortescue Metals Group losing 1.2 percent and ANZ tumbling 3.6 percent.

Woolworths rose 1.1 percent after the top grocer agreed to increase wages to resolve a strike action by industrial union workers.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index finished marginally lower at 12,801.80.

Europe

European stocks have risen for an eighth consecutive session on Monday, with China-related miners, luxury goods makers and automotive companies leading the way higher.

A measure of China’s consumer inflation unexpectedly decelerated in November and factory deflation eased, raising hopes for more proactive fiscal and monetary policies next year to boost domestic consumption.

The Politburo, a top decision-making body led by President Xi Jinping, said today it will stabilize property and stock markets while strengthening the “unconventional counter-cyclical” adjustment.

Investors also monitored the flare-up of tensions in Syria and awaited a European Central Bank policy meeting and the U.S. inflation figures this week for direction.

The ECB is expected to cut interest rates again this week amid worries about how fiscal policy will develop in Germany and France.

In economic releases, the Eurozone Sentix Investor Confidence Index declined to -17.5 in December from -12.8 in November, the latest survey showed.

Separately, a new report has revealed that U.K. business confidence has fallen to its lowest level since January 2023.

The U.K.’s FTSE 100 Index is up by 0.6 percent and the French CAC 40 Index is up by 0.5 percent, although the German DAX Index is just below the unchanged line.

CompuGroup Medical has skyrocketed on the day. The provider of healthcare software said it is in advanced talks to be acquired by CVC Capital Partners.

Banco BPM climbed 1.5 percent while its suitor UniCredit dipped 0.8 percent after Credit Agricole SA raised its stake in Banco BPM. Credit Agricole shares were up 1 percent.

Meanwhile, Domino’s Pizza Group fell nearly 3 percent in London after announcing it has reached a new five-year framework with its franchise partners.

Nutrition products maker Reckitt Benckiser has edged down slightly after releasing an update on its share buyback program.

German meal-kit company HelloFresh has slumped 6.2 percent after reports of a U.S. probe over allegations of child labor.

U.S. Economic News

The Commerce Department is scheduled to release its report on wholesale inventories in the month of October at 10 am ET. Wholesale inventories are expected to rise by 0.2 percent.