How Did The US Markets Fare On Tuesday?
The Dow Jones gained nearly 300 points, although it closed off the highs of the day. With this, the index has gained over 2,000 points during its four-day winning streak.
However, the S&P 500 declined 0.6% on Tuesday, while the Nasdaq fared worse, ending with losses of 1.2% dragged lower by chip stocks.
Why Did The Dow Gain But Nasdaq Fall On Tuesday?
Investors on Wall Street rotated out of the high-performing chip stocks on Tuesday, leading to profit booking in both the S&P 500 and Nasdaq indices.
Chip stocks from Nvidia, to AMD, Broadcom, Micron, Intel, declined between 2.5% to 8.5% on Tuesday, dragging the tech-heavy indices lower.
The funds rotated out of these chip names into the old economy stocks, leading to the outperformance of the Dow Jones. The SpaceX IPO and subsequent listing has also contributed to the underperformance of the S&P 500 and Nasdaq recently as investors have chosen to take profits from here to invest into Elon Musk’s trillion-dollar startup.
How Did SpaceX Fare On Tuesday?
SpaceX announced before market open on Tuesday that the company has agreed to acquire Cursor, in a deal that will value the AI coding start-up at $60 billion.
Having opened with gains of close to 10%, and extending them to as high as 15%, SpaceX crossed Amazon in market capitalisation, and also crossed Microsoft, albeit briefly. At one point, the stock broke into the top four most valuable companies in the world.
However, the stock witnessed some profit booking towards the close of trade, ending 10% off the highs, but with gains of 4%. At close, SpaceX and Amazon nearly had the same market value of close to $2.66 trillion.
The lack of free float in SpaceX is also contributing to the volatility. Over 911 million insider shares of the company will free up only two days after it reports its quarterly results, but that is only expected in the first week of August.
Will The US Fed Hike Interest Rates Tonight?
The answer to this is no, at least according to the CME FedWatch tool, which projects a 99.5% probability of a status quo policy.
The street though, will be awaiting commentary from new Fed Chair Kevin Warsh, and the Fed dot plot, which many insiders believe, the new Chair will not participate in.
Economists, however, warn that if Warsh does not participate in the dot plot projections, something he has been vocally against, as he believes it limits the Fed’s decision-making ability, it will send a wrong signal to the markets.
