Dow drops, Netflix beats, Nvidia rebounds

This report comes from today's CNBC Daily Open, our international markets newsletter. CNBC Daily Open keeps investors updated on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

broad selling
this Dow Jones Industrial Average Dropped more than 500 points As investors trimmed positions in technology stocks and took profits in other sectors. this S&P 500 Index and Nasdaq Index also dropped, with letter and apple It was one of the big tech stocks that fell on Thursday. Even those focused on small caps Russell 2000It has risen 3.5% and fallen 1.9% over the past five sessions on hopes of a rate cut. 10-Year Treasury Bond Yield Ministry of Finance Climbalthough US oil prices It was slightly lower.

Netflix beat
Netflixof Second-quarter profit beats expectations Consolidating its dominant position in the streaming media market. During the reported quarter, the company's ad-supported membership grew by 34%, and global paid membership increased by 16.5% to 278 million. That growth, combined with a crackdown on password sharing, pushed revenue up 17% to $9.6 billion. Netflix raised its full-year revenue growth forecast from 13% to 14%-15% to 15%. Net income rose to $2.15 billion, or $4.88 per share.

Nvidia rebounds
Nvidia shares rose 3% on Thursday Recovering from 7% drop in the last session as Donald Trump's comments on Taiwan triggering geopolitical concerns. The rise of Nvidia is in British Semiconductor explain Demand remains high The supply of high-end artificial intelligence chips produced by TSMC for Nvidia is restricted. The semiconductor industry had its worst day of 2020 on Wednesday AMD, arm, Broadcomand Qualcomm It's also declining. “TSMC said it will continue its overseas expansion despite growing concerns about geopolitical tensions in light of the upcoming U.S. presidential election,” Citi analyst Laura Chen wrote in a note Thursday. , to mitigate risks.

Electric car rims on hold
Ford yes Invest US$3 billion to expand production Of that amount, $2.3 billion was invested in its Canadian factory, which was previously planned to become an electric vehicle hub. Although Ford plans to realize the next generation of electric vehicles super truck, specific details have not yet been disclosed. The decision follows recent remarks from CEO Jim Farley, who said the full electrification of large vehicles such as Super Duty trucks is “Never make money”.

Online sales records
AmazonPrime Day sets record U.S. online spending reaches $14.2 billionAccording to data from Adobe Analytics, the annual growth rate is 11%. Back-to-school shopping and consumer demand for new electronics are driving the surge, which contrasts with last year's focus on household essentials by inflation-weary shoppers. Amazon highlighted the role of its artificial intelligence shopping assistant, Rufus, in facilitating customer browsing.

(PRO) Trump Trade
The banking sector will perform well in the near term because “Trump trade“Momentum is strong,” Wells Fargo said. Financial Select Sector SPDR Fund Up 3.7% for the week, driven by strong second-quarter profits from major banks Bank of America, Morgan Stanleyand Citigroup.

What does the semiconductor debacle tell us? this PHLX Semiconductor Industry IndexThe stock fell 6.8% on Wednesday on concerns about tighter export regulations and Trump's remarks about Taiwan, but rebounded only slightly by 0.5% on Thursday.

“We understand the rotation from AI/data center semis to industrial/automotive/consumer, but this is not supported by fundamentals and is likely to be short-term,” Bank of America analyst Vivek Arya said in a note Wednesday. Positioning driven.

Despite the recent sell-off, Arya remains bullish on the sector, especially artificial intelligence, which he sees as the strongest and most reliable capex area. Outside of artificial intelligence, “global growth remains bleak at best,” he added, citing consumer constraints on PC/smartphone upgrade cycles, sluggish enterprise and telecom demand, and weak demand in China.

However, there are ongoing concerns about artificial intelligence and its ability to change the status quo. Huge capital expenditures translate into profits Due to the lack of killer artificial intelligence end uses. MicrosoftSupport OpenAI Launched GPT-4o mini On Thursday, a smaller version of its flagship artificial intelligence model. The $80 billion company is under pressure to maintain market leadership and monetize its technology in the face of increasing competition.

Alger CEO Dan Chung told CNBC Recent volatility in chip stocks is creating a “buying opportunity.””

“These companies are politically sensitive companies, and for good reason because they are the most important part of the semiconductor industry, ASML Especially unique,” he said Wednesday.

“They’ve given up quite a bit of revenue because of restrictions and exports to China. I think the political football is going to continue around this issue. We have more trade with China than we have with China. We have more trade with us. Lots of trade. “Partners around the world, even as we debate the political ramifications… this noise is creating a buying opportunity, or may soon create a buying opportunity. ”

Nvidia bounces back from deep losses British Semiconductor explain Explosive demand for artificial intelligence leads to tight supply of chipssupporting Chung and Arya. BroadcomAnother chipmaker seen as a beneficiary of huge demand for artificial intelligence also rose 2.9%.

However, Markets had another rough trading day on Thursday. There may be more to come. Rich Ross, director of technical analysis at Evercore ISI, warned in a note to investors that stocks could see short-term weakness due to historically weak performance in the coming months. Still, Ross maintained his bullish outlook on the S&P 500, with a year-end target of 5,800.

— CNBC’s Michelle Fox, Michael Wayland, Annie Palmer, Hayden Field, Pia Singh, Alex Harring, Sarah Min, Kif Leswing and Lillian Rizzo contributed to this report.