Nasdaq 100 Falls Ahead of Key Risk Events, Nvidia Drops 1.8%

Equities Decline Before Important Macro/Earnings Week

Investors were cautious on Monday as major US indexes traded in a range of directions ahead of a crucial week for corporate results and major global events. These include profits from US industry behemoths Coca-Cola, Apple, Amazon, Google, Meta Platforms, and Microsoft. According to Reuters, 74.8 percent of the 107 S&P 500 businesses that have released their Q2 results as of Monday morning had surpassed analyst expectations, which is less than the 81 percent rate of the previous four quarters but still much higher than the historical average of 66 percent.

In the meantime, the Fed is anticipated to raise interest rates by another 75 basis points on Wednesday, returning them to levels seen before the pandemic. US GDP data will also be released on Wednesday, which will determine whether or not the US economy entered a technical recession in the first quarter of 2022. Equity bulls are looking for a "goldilocks" scenario in which Fed Chair Jerome Powell adopts a milder tone on upside inflation risks and the need of aggressive tightening, while GDP figures demonstrate that, for the time being, a recession has been averted.

On Wall Street, however, there is increasing talk that the current market comeback, which has seen the S&P 500 rise almost 8% from its yearly lows set back in June, may be coming to an end. According to Jonathan Krinsky, an analyst at BTIG, as stated by Reuters, "We are still inside the bounds of a bear market."

Names Chip Weigh

The S&P 500 finished the day little up and was last trading in the 3,960s, around 1.5 percent off the highs it hit over 4,000 at the conclusion of last week, but still comfortably above its 50-Day Moving Average at 3,920. While all was going on, the Nasdaq 100 index was last trading in the 12,300s, having lost around 3.0% from last Friday's highs in the 12,600s due to underperformance in key chip names.

Market experts blamed analysts' negative comments for the decline in chip equities (the Philadelphia semiconductor index was last down approximately 1.2 percent). In a report published on Monday, Barclays suggested that the recovery in chip stocks that has seen the Philadelphia Semiconductor Index rise 18% from yearly lows is a "head fake."

Nvidia was among the US chipmakers whose price forecasts Barclays lowered, and the industry seems to be suffering as a result of the gloomy commentary. Christopher Rolland, a Susquehanna analyst, lowered his price target on a few semiconductor stocks and cautioned that businesses dependent on PCs and smartphones run the danger of an industry slump.

Information technology and consumer discretionary, both down over 1.0 percent, were the S&P 500 GICS sectors that underperformed. The highest performance was seen in the energy sector, which saw a gain of about 4% in response to a recovery in oil prices.