Nvidia, AI Chip Plays Hit Resistance: Weekly Review

The stock market rallied in a holiday-shortened week. The Nasdaq and S&P 500 hit new highs, even as they retreated Nvidia (NVDA) and other hot AI stocks pulled back. The Dow Jones had a solid gain, regaining its 50-day line. The Russell 2000 rallied but is still below that key level. Treasury yields rose but are still near recent lows. Crude oil prices recovered.

↑
X

PLAYING
The bulls are running. This trading rule is key when everyone is making money.

Rally Marketing thrives

The stock market saw gains in major indexes, although growth remains uneven. The Dow Jones had the strongest week yet, retaking the 50-day line. The Nasdaq and S&P 500 pared weekly gains, rebounding from record highs as Nvidia ( NVDA ) and other hot AI stocks fell. Treasury yields rose but still near multi-month lows. Crude oil futures rose.

Economic data weakens

The latest set of economic data showed that retail sales rebounded more slowly, housing starts fell and the four-week average of new jobless claims hit an eight-month high. This is making the case for a Fed rate cut. Retail sales rose just 0.1% in May, while April sales were revised to a -0.2% monthly change from a flat initial reading. Excluding cars, sales are now down 0.1% in the past two months. Overall sales rose 2.3% from a year ago, slowing from April’s downwardly revised 2.7% pace. Housing starts fell 5.5% in the month to an annual rate of 1.277 million units, which was down 19% from a year earlier. Single-family starts are down a modest 1.7% from a year ago, but multi-family starts are down 51.7%. Jobless claims fell by 5,000 to 238,000 in the week to June 15, but the four-week average rose by 5,500 to 237,750.

On the upside, industrial production rose a better-than-expected 0.9%, with a 0.3% increase among manufacturers and 1.6% among enterprises.

Beat Views Home Builders

KB Home page (KBH) and Lennar ( LEN ) both reported better-than-expected earnings for the second quarter. Lennar’s earnings per share rose 15% while revenue rose 9% to $8.8 billion. Homes delivered rose 15% to 19,690. But the average price fell 5% vs. a year ago amid increased incentives, with direction pointing to slightly lower prices in the third quarter vs. Q2. KB Home’s EPS rose 11% while revenue fell 3% to $1.71 billion and shipments fell 4% to 3,523. However, prices rose slightly with KB Home increasing its full-year revenue and average price targets. Shares of KBH edged up modestly from the 50-day line, while Lennar fell steadily, missing the 50-day. Meanwhile, housing economic data has weakened.

Tesla sales delay in China

Tesla China registrations fell last week, currently down 9% in the quarter vs. Q2 2023. Meanwhile, the Model 3 Long Range variant is now eligible for the $7,500 credit. The SEC’s investigation into Tesla CEO Elon Musk’s late and inaccurate disclosures about his Twitter holdings in April 2022 could prompt regulators to ask a court to bar him from serving as an officer or director of a public company. Tesla shares rose modestly.

short

Nurix Therapeutics (NRIX) said Monday that more than 69% of patients with relapsed or refractory forms of chronic lymphocytic leukemia responded to its treatment. Nurix tested the oral drug in patients who had previously undergone two to 14 previous treatments. Nurix shares, after falling on Monday, rose to a two-year high for the week.

Kroger (KR) reported a 5% decline in EPS in the fiscal first quarter, the first decline in 12 quarters, but less than expected. Revenue was marginally higher at $45.2 billion. The grocery giant held guidelines. Shares turned lower.

Dell Technologies (DELL) and Super Micro Computer (SMCI) will provide server racks for a supercomputer owned by Elon Musk’s artificial intelligence startup xAI. The supercomputer will use Nvidia (NVDA) AI processors.

Sarepta Therapeutics (SRPT) skyrocketed after the FDA granted full approval for its Duchenne muscular dystrophy gene therapy for all patients age 4 and older. Last year, the FDA granted an accelerated approval for Duchenne patients aged 4-5 years.

YOU MIGHT LIKE:

Why this IBD tool simplifies the search for top stocks

Catch the next big winning stock as the market rises

The best growth stocks to buy and watch

IBD Digital: Unlock IBD’s premium stock lists, tools and analysis today