Thursday Macro & Markets Update – 04.18.24
Market News

Thursday Macro & Markets Update – 04.18.24

Stocks fell for a fourth straight day on Wednesday, their longest losing streak since January. Markets were weighed down by chipmakers, with the semiconductor sector’s index falling into correction territory with a drop of over 10% from its peak in March. Nvidia (NVDA) led the declines in megacaps, as investors continued to take in profits after a red-hot first-quarter rally for the AI bellwether. All major indexes finished the day in the red, with the tumble in tech benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) indicating a period of consolidation for shares that have led the market over the course of the past year and a half.

Chipmakers’ Correction

Yesterday’s drop in Nvidia and other semiconductor stocks was spurred on by ASML Holding (ASML), the world’s largest manufacturer of chip-producing equipment, which turned in disappointing quarterly results and guidance.

While ASML reported surging demand from China for its equipment used for manufacturing less advanced chips, it saw a slump in orders for its high-end machines from Taiwan Semiconductor (TSM), Samsung Electronics (SSNLF), and Intel (INTC). These three are the world’s main semiconductor foundries, producing chips for Nvidia, AMD (AMD), Apple (AAPL), Qualcomm (QCOM), and other tech market leaders. 

However, futures are looking up today, with the markets cheering positive news from Taiwan Semiconductor, which alone is responsible for over 60% of the global foundry business. TSM has already said that its Q1 sales were far above estimates, with stronger-than-expected revenues and net earnings fueled by AI-related chip demand. The company released an optimistic second-quarter guidance, indicating continued robust demand for advanced chips.   

Macro Weighs on Markets

The recent chipmakers’ slump, as well as the broader market declines, has been led by several factors beyond weak results at specific companies.

Investors have been unwinding bets on an additional boost to stocks from lower interest rates, which were widely expected until the latest economic data spilled cold water on these hopes. The resilient economy and sticky inflation forced policymakers to dampen impending monetary easing expectations in the past month. Indeed, Fed Chair Jerome Powell said that the rates may remain at a restrictive level for a longer period if high inflation persists. Markets now view September as the potential starting point of the easing cycle.

However, stronger-than-expected economic growth may offset the disappointment from stricter monetary policy, as it supports earnings and margins, potentially lifting stocks higher. As the Fed pulls its rate-cut support from the markets, earnings remain the most crucial indicator for the market’s near-term path. Investors are bracing for the report of the streaming giant Netflix (NFLX), scheduled to come out today after close, and for the quarterly results of Procter & Gamble (PG), due tomorrow.          

Notable Stock News

¤ UnitedHealth Group (UNH) rallied, lending support to the Dow Jones Industrial Average (DJIA), as the company’s earnings beat analysts’ expectations.

¤ United Airlines (UAL) soared over 17% after posting a significantly smaller-than-expected net loss in Q1, while issuing upbeat guidance for the ongoing quarter.

¤ Travelers Companies (TRV) had its worst trading day in four years as the property and casualty insurance firm missed earnings estimates following higher-than-expected catastrophe losses.

¤ Super Micro Computer (SMCI) found support amid the sector’s downturn after Loop Capital Markets’ analysts lifted its price target to $1,500, implying over 50% upside.  

For more exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.


Price Change
S&P 500
Dow Jones
Nasdaq 100

Popular Articles