Semiconductor, AI ETFs Rise Amid Mixed Tech Sector
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Cathie Wood's ARK Invest Adjusts Tesla, CrowdStrike holdings.
TrueShares Technology, AI & Deep Learning ETF (LRNZ), a global equities found focused on artificial intelligence and deep learning, rose 0.9%, thanks in part to its nearly 17% holding in Nvidia Corp., which jumped today on speculation it has a new product for China.
LRNZ gained despite its 8.9% holding in troubled CrowdStrike, which plummeted 13%. Nvidia added 4.6% after Reuters, citing anonymous sources, said Monday that the chipmaker is developing a variant of its Blackwell chips tailored for the Chinese market. This new version is reportedly being designed to comply with existing U.S. export regulations.
First Trust NASDAQ Cybersecurity ETF (CIBR), which holds 8% of CrowdStrike, was down 0.2%.
Despite maintaining an optimistic outlook on the electric vehicle manufacturer, Cathie Wood’s Ark Invest has reduced its Tesla Inc. holdings over the last two trading sessions, according to Cathie's ARK, an independent site tracking trading in ARK Invest funds. Specifically, ARK Next Generation Internet ETF (ARKW) sold a total of 17,600 Tesla shares last week. In contrast, ARKW acquired 27,100 shares of CrowdStrike. Despite these changes, ARKW closed 1.5% higher.
Semiconductor stocks rebounded as investors showed renewed interest in chipmakers following last week’s sharp sell-off. The VanEck Semiconductor ETF (SMH) surged 3.9%, working to recover from a 10% decline over the past month.
On Semiconductor gained 6.6%, contributing to the positive performance of the First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN), which holds 6.2% of the stock and rose 2.3%.
KLA Corporation advanced 6.2%, boosting ProShares NASDAQ-100 Dorsey Wright Momentum ETF (QQQA) up 2%, as the fund holds 5.4% of the stock.
ASML Holding jumped 5.1%, boosting Strive U.S. Semiconductor ETF (SHOC), which holds 10.7% of the stock, up 4%.
Tech ETFs Rise as Bonds Decline Ahead of Inflation Data
Capital markets are moving like it's the first half of 2024 again.
Semiconductors led tech ETFs and the broader stock market higher Monday afternoon following a rare string of declines last week while bond prices fell ahead of this week's GDP and PCE readings.
The VanEck Semiconductor ETF (SMH) led stock ETFs with a 3% gain by mid-afternoon while the iShares 20+ Year Treasury Bond ETF (TLT) declined by 0.4%.
Nvidia stock's 4% gain helped to lift tech and AI ETFs as investors appear to look forward to another potential earnings beat by the semiconductor company. Excitement builds over its "next gen" GPU platform release, Blackwell, as it is expected to improve performance on large language models compared to its predecessor.
Bond investors are anticipating Thursday's second quarter reading on U.S. Gross Domestic Product, which is expected to reveal that the economy grew at a 1.9% annualized rate during the April through June quarter, which is hotter than the 1.4% growth during Q1.
Friday's Personal Consumption Expenditures report is forecast to show a 0.2% month-over-month gain for its core index in June, up from 0.1% in May.
While the GDP and PCE numbers are not inflationary, they are slightly stronger than bond investors want to see as they hope for a September rate cut.
Biden's announcement that he's departing presidential race may boost uncertainty
Broad equity markets opened higher Monday on the first trading day following President Joe Biden's announcement that he's abandoning his reelection efforts and throwing his support behind Vice President Kamala Harris.
The SPDR S&P 500 ETF Trust (SPY) was up 0.9% in midmorning trading, paring earlier gains. The tech-heavy Invesco QQQ Trust (QQQ) gained 1.4%. The Roundhill Magnificent Seven ETF (MAGS) added 1.8% as Nvidia Corp. shares jumped.
Donald Trump's Trump Media & Technology Group Corp. (DJT), which had been down 4% at the market’s open, shed some losses and was 1.8% lower.
Biden's exit from the race followed weeks of growing pressure from Democratic supporters and elected officials. While adding a measure of clarity to the political landscape, Democrats still must select a candidate to run against the surging Donald Trump, and many party members are unsatisfied with Biden's endorsement of Harris to take his place at the top of the ticket.
Markets may be in for swings as the political situation remains unresolved.
“With uncertainty usually comes volatility,” said Ben Engel, investment advisor at Modesto Capital in Toms River, N.J.
The weekend news came just a week after an assassination attempt on Trump at a rally in Pennsylvania, which killed one spectator and injured two others. The markets did not see increased volatility when they opened last week.
“Events like these are great for strengthening your stance on investing,” Engel said.
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