US tech stocks drop. The ASX200 hits a new record all time high. Bitcoin pushes back to US$96,000. Square is about to overtake Macquarie as the 8th biggest company
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Tech stocks drop but many investors will use the pull back as a buying opportunity.
US stocks dropped from their record all-time highs, with tech stocks blowing off steam. 66 of the top 100 big tech names fell ahead of Wall Street closing for Thanksgiving. It may seem ominous to some with Nasdaq 100 index falling 0.9%, but it’s not all doom and gloom. And there’s several things to note suggesting the long-term bullish narrative seems intact.
Firstly, remember that the day before a public holiday volume of trades thins out. So moves in either direction are exacerbated.
So that’s what happened overnight – investors decided to take profits off the table from some of this year’s best performers ahead of going on holidays. And as the volume of trades was as thin as a piece of paper, the swings got accelerated.
Tesla shares fell 1.6%. But remember the EV giant’s shares are up 33% since the election. Constellation Energy fell 5%, erasing almost all of yesterday’s gain but it’s still up 117% this year.
Shares in the world’s biggest cybersecurity company, CrowdStrike, fell 4% on a weaker-than-expected earnings forecast. But do you remember the CrowdStrike glitch in late July? It triggered its shares to fall 48%. And I was saying that you should expect institutional investors to buy the dip as its shares fell to $200 with most of its business under contract. And if you bought around August 5, you would have made 73% from August as today CrowdStrike’s is at $347.59. So there’s a little reminder in the power of buying a quality stock after a big pullback.
Secondly – what do you need to consider? Shares in the world’s biggest company, Nvidi $NVIDIA (NVDA.US)$ , fell 1.1% overnight, but it’s up 172% this year.
Although the technical indicators look scary and suggest Nvidia $NVIDIA (NVDA.US)$ shares could continue to fall, with selling picking up pace since November 21, investment bank Citi reckons Nvidia shares will bolt up over the next 90 days. Nvidia’s CEO is giving a keynote big speech at the CES 2025, or the Consumer Electronics Show. It’s a big global tech event that will take place from January 7–10 in Las Vegas. Citi analysts think Nvidia shares could rise 27% to $175 by January. Why? Well simply Nvidia’s GPU chips are central to AI workloads and that demand is increasing all over the world.
Thirdly - consider why investors might be taking profits here, meaning markets could fall before going back up. Well simply, fresh data came out affirming the US Federal Reserve doesn’t need to hurry to cut interest rates. US economic growth was 2.8% in the quarter, driven by a bump in consumer spending. That’s positive and what Wall Street hoped for. And the Fed’s preferred inflation gauge, known as core PCE, showed inflation is slowing more than expected (CPI fell to 2.1% in the quarter, down from 2.2% prior).
What do you need to watch locally?
The good news is the US dollar fell again, as did bond yields as bets are increasing that the Fed can cut interest rates next month. This is positive for tech stocks, gold, and commodity prices and stocks, giving them a runway to move up. Speaking of, iron ore is up 16% from September, but we haven’t yet seen BHP, Rio, or CIA turn higher markedly higher which is interesting. While Square $Block (SQ.US)$ $Block Inc (SQ2.AU)$ should do well today as Bitcoin rose 5.5% back to $96,000. Also note that Block is now bigger in market size than Fortescue Metals, and ResMed
Today, the ASX $S&P/ASX 200 (.XJO.AU)$ hit a brand new record all time high today and the narrative ahead looks increasingly bullish in light of yesterday's strong than expected construction data.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Moomoo Official Market Strategist
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