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The Biden administration has told allies that the United States will consider tough restrictions if companies such as Tokyo Electron and ASML continue to supply advanced semiconductor technology to China. The United States is also considering additional sanctions on specific Chinese chip companies with ties to Huawei Technologies Co.
Bond market volatility was muted. The Fed’s Beige Book showed modest economic growth and cooling inflation. The most watched Fed speaker overnight was Governor Christopher Waller, who said the Fed was “close” to a rate cut but had not yet done so.
In the first half of the year, giants such as artificial intelligence giants Nvidia, Microsoft and Google parent Alphabet drove the market higher, leading to overvalued valuations for these companies and making their situation more difficult for the rest of 2024, while technology stocks performed poorly.
“A large portion of the stock market’s gains this year have come from a handful of stocks that are now directly threatened by the political arena,” said Jose Torres of Interactive Brokers. “The big question is whether the rest of the market, which is often lacking in exciting stories, can offset the waning momentum of ‘The Magnificent Seven’ stocks.”
Goldman Sachs technical strategist Scott Rubner sees only downside ahead for the S&P 500. That’s because, he says, Wednesday, July 17, has historically marked a turning point for equity benchmark returns, citing data going back to 1928. Next up, he says, is August — typically the heaviest month for outflows from passive stocks and mutual funds.
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