To The Moon

On Mon, 9 Dec 2024, US stocks retreated after a rally that put the market on pace for its best year since 2019.

Traders are waiting for the key inflation data that will help shape the outlook for Fed’s funds rates.

By the time market called it a day: (see above)

(1) DJIA: -0.54% (-240.59 to 44,401.93).

(2) S&P 500: -0.61% (-37,42 to 6,052.85).

• 9 out of 11 S&P 500 sectors lost ground, led by declines in financial stocks.

• Posted 21 new 52-week highs and 2 new lows.

(3) Nasdaq: -0.62% (-123.08 to 19,736.69).

• Recorded 122 new highs and 60 new lows.

Yesterday’s trading volume was 15.11 billion shares, compared with the 14.46 billion average for the full session over the last 20 trading days.

Although the major indexes notched losses, rising stocks modestly topped falling issues on both Nasdaq exchange and the New York Stock Exchange.

As usual, investors are ‘nervous’ about US market, while they are waiting for the release of the all-important:

• Consumer Price index (CPI) on Wed, 11 Dec 2024.

• Producer Price index (PPI) on Thu, 12 Dec 2024.

This data could influence the Fed’s decision when they convene for the FOMC meeting on Dec 17-18.

On the run up to radio silence, several Fed officials, including Chair Jerome Powell, have emphasized caution regarding the central bank's approach to easing monetary policy due to US economy's resilience.

All is quiet now as the Fed’s blackout window has kicked in.

All forms of socializing by Fed members have halted until 19 Dec 2024 (inclusive).

CME FedWatch Tool - latest.

Still, bets on a -0.25% rate cut at the upcoming meeting shot up to > 85% after Fri, 06 Dec 2024 economic data for November 2024, showed a rise in unemployment rate to 4.2%, indicating an easing labour market. (see above)

King Has Lost Its Crown?

Nvidia sank -2.55% and was back below the $140.76 buy point. (see above)

Dip came after news that China's State Administration for Market Regulation said it began an investigation into Nvidia on suspicion of anti-monopoly violations.

Both Bloomberg & Reuters have reported that the State Administration for Market Regulation mentioned that Nvidia is suspected of violating its 2020 commitments, made during its acquisition of Israeli firm Mellanox Technologies.

China had approved that deal on the condition that Nvidia does not discriminate against Chinese firms.

The market was taken by surprise regarding China's investigating (Nvidia) as a possible antimonopoly law violation, hence the knee-jerk reaction.

Even with on-going export restrictions imposed by the US govt, Nvidia still get about 15% of its revenue from the Chinese market.

Nvidia’s fall has dragged the information technology sector down by -0.45%.

Shares are below the 21-day exponential moving average and are testing the 50-day moving average. (see above)

My viewpoints: (mine only)

If we believe what is reported in the news, then the report about China investigating Nvidia for antimonopoly practice is just, a news story.

Meaning, there is no need to overreact. (see below)

Wasn’t it reported in September 2024 that China wants its companies to buy Chinese-made AI chips instead of Nvidia's ? (see above).

This is to help expand and advance the (local) semiconductor industry and counter US sanctions.

And wasn’t it 2 weeks later (in October) that government-backed think tank suggested that data centres in mainland China should choose Nvidia chips, warning of high costs involved in shifting to domestic solutions ? (see above)

Guidelines laid down by China Academy of Information and Communications Technology (CAICT):

• If the conditions allow, [data centres] can choose Nvidia’s A100 and H100 high-performance computing units.

• If the need for computing power is limited, companies can also choose H20 or alternative domestic solutions.

Ask Yourself:

• Can China afford to outright ban the import of Nvidia’s AI chips ?

• Can China produce equally ‘fast’ & efficient AI chips like Nividia’s now ?

• Has China declared that Nvidia has outright flout its antimonopoly rule ?

Openly, I am hoping that Nvidia will further consolidate so that there is a chance to pick up this pedigree stock at a discount. Agree ?

Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.

• PLTR will surge to $80. Possible ?

• Magnificent 7 will defy Jobs & Inflation data.

• SPY’s reign over? Rise of VOO, IVV & SPLG ?

• Do you think US market will continue to pull back today ?

• Do you think Nvidia will continue to dip today?

If you find this post interesting, give it wings! ️ Repost and share the insights ?

Do consider “Follow me” and get firsthand read of my daily new post. Thank you.

@Daily_Discussion

@TigerPM

@TigerStars

@Tiger_SG

@TigerEvents