Wednesday, August 28, 2024, at Nvidia headquarters in Santa Clara, California, USA.
Loren Elliott | Bloomberg | Getty Images
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.
What you need to know today
ugly market
U.S. stocks suffered their worst day since the August 5 sell-off, dragged down by Nvidia's plunge and weak economic data. Asia-Pacific stock markets plunged on Wednesday, led by the United States. Japan's Nikkei 225 index fell more than 4%, South Korea's Kospi index fell about 3%, and Taiwan's weighted index fell 4.5%.
Weak links in Nvidia’s supply chain
The Asian markets mentioned above have declined so sharply because they are made up of Asian chipmakers that have the closest ties to Nvidia's supply chain. SK Hynix's shares fell 8% and Samsung Electronics' shares fell 3.3%. They produce memory chips for Nvidia. British SemiconductorShares of the company that makes Nvidia graphics processors fell 5.4%.
low calorie
U.S. crude futures fell more than 4% on Tuesday and continued to fall around 0.6% in Asian trading. U.S. West Texas Intermediate oil prices Oil prices are currently at $69.88 per barrel, exceeding gains in 2024.
(PRO) Powering Artificial Intelligence
The energy industry is a natural beneficiary of the artificial intelligence boom. Artificial intelligence data centers consume large amounts of electricity, which means energy companies are very close to technology stocks – RBC Capital Markets sees this oil and gas stock with 25% potential upside.
bottom line
Some investment advice comes from an unlikely source: recently reformed British band Oasis. In one of their songs, they croon: “Hang on / Don't be afraid / You'll never change what's been and gone.”
Investors should keep this in mind as they absorb Tuesday's market moves. this S&P 500 Index down 2.12% Dow Jones Industrial Average Down 1.51% Nasdaq Index A loss of 3.26% (yikes).
A combination of factors could be responsible for Tuesday's market weakness.
First, U.S. manufacturing activity remained in contraction territory in August. This has reignited concerns that the U.S. economy is not as strong as it appears.
Next, Nvidia fell nearly 10%. Other chipmakers in the United States and Asia have also been hit by the shockwaves. Intel fell 8.8%, SK Hynix fell more than 7% Tokyo Electronics down 8.7%. Nvidia shares fell about 2% in after-hours trading following reports that the U.S. Department of Justice had begun investigating the chipmaker for antitrust reasons.
In the end, this grim mood may just be an expectation.
Historically, September is the worst month for the S&P. The index has fallen an average of 2.3% over the past 10 months, according to FactSet data.
That said: Yes, there are real reasons to be worried about this month. Fundstrat co-founder Tom Lee warned investors to remain cautious over the next eight weeks, saying the stock market could pull back 7% to 10%.
But it's also important not to react impulsively.
Timothy Fiore, chairman of the ISM Manufacturing Business Survey Committee, pointed out that although the ISM data showed a decline in manufacturing activity, it was still more than 42.5%, which usually indicates that the overall economy is expanding.
Although Nvidia wiped $300 billion from its market value on Tuesday, its shares are still up 118% this year.
As another Oasis song advises, when it comes to long-term investing, we should remember “the importance of idleness.” Don't let panic get the better of you.
– CNBC's Jeff Cox, Alex Harring and Fred Imbert contributed to this report.