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Nvidia (NVDA)
Shares in chip company Nvidia plunged on Tuesday, ending the session nearly 10% lower, amid renewed concerns around economic growth in the US.
Figures from the Institute for Supply Management (ISM) showed that a measure of US manufacturing ticked higher last month but the metric reflected slowing factory activity, as the reading came in below a threshold that suggests a contraction in the sector. Investors are also looking ahead to Friday’s non-farm payrolls report.
US markets tumbled, with Nvidia and other chipmakers leading other tech stocks lower. The S&P 500 (^GSPC) fell 2.1% in previous session, the Nasdaq (^IXIC) declined 3.3% and the Dow Jones Industrial Average (^DJI) was down 1.5%. This has weighed on other markets with Japan’s Nikkei 225 (^N225) plunging 4.2%. The UK’s FTSE 100 (^FTSE) was down 0.86% on Wednesday morning.
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Nvidia extended losses in pre-market trading, down nearly 2%. This comes after the US Department of Justice sent subpoenas to Nvidia and other companies as it seeks evidence that the chipmaker violated antitrust laws, an escalation of its investigation into the dominant provider of AI chips.
Swetha Ramachandran, fund manager at Artemis Investment Management, said the fund manager views Nvidia’s fall as “a recalibration of its near-term prospects than a reflection of structural concerns — the company continues to grow its share of the AI chip market and to innovate in this area.”
Barratt Developments (BDEV.L)
Housebuilder Barratt Developments dipped 2% on Wednesday morning, after the company reported that its profit before tax for the year ended 30 June 2024 was 75% lower than the previous year, at £170.5m ($223.7m).
Barratt also posted revenues 22% lower than in 2023, at £4.17bn, though this was in line with expectations, said Richard Hunter, head of markets at Interactive Investor.
The housebuilder halved its dividend to 16.2p per ordinary share, down from 33.7p in 2023.
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Hunter said: “There is an element of kitchen-sinking to these numbers as Barratt has revealed the true extent of a difficult year.”
Hunter said there were some signs of an improving economic backdrop and that its acquisition of Redrow could be “transformative if the element of integration risk over the next couple of years is successfully navigated.”
Shares of Alphabet fell almost 4% on Tuesday, after Morgan Stanley lowered its price target on the tech firm.
The bank cut its target on Alphabet to $190 from $205, citing ongoing legal challenges with the US Department of Justice (DOJ) related to accusations of antitrust violations and monopolistic practices.
Alphabet lost a key antitrust case earlier in August, in which a court ruled ruled that Google monopolises online search.
Morgan Stanley analyst Brian Nowak said that the regulatory issues could take several years to resolve, potentially impacting the company’s long-term outlook.
Boeing (BA)
Plane manufacturer Boeing fell 7% in the previous session, after the company was downgraded by Wells Fargo, as it warned that shares could fall nearly 30%.
Boeing is facing fresh labour challenges, as reports say that 32,000 workers could begin a strike this month if the business and union are unable to reach a deal.
Wells Fargo analyst Matthew Akers cut the price target on the stock to $119, according to Bloomberg. Akers said that he expected Boeing’s free cash flow per share to peak by 2027.
Akers also highlighted softening demand, as well as technical issues that needed to be dealt with on Boeing’s 777X jetliner and Starliner spacecraft.
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