Dow Jones Futures: Recession Fears Grip Stock Market; Nvidia AI Chip Delayed? – Investor’s Business Daily

stock market’s attention will be on Dow Jones, S&P 500, and Nasdaq futures opening Sunday evening, especially focusing on Apple (AAPL) and Nvidia (NVDA). Berkshire Hathaway (BRKB) reported solid earnings but reduced its Apple stake. Nvidia’s next-generation Blackwell AI chips face delays due to design flaws. 

Key Events and Developments 

• Market Downturn: Last week saw sharp losses across the stock market, spurred by recession fears from weak economic data and Amazon’s (AMZN) consumer headwinds warning. 

• Fed Signals Rate Cuts: Fed Chair Jerome Powell hinted at upcoming rate cuts, with markets predicting a 50-basis point cut in September and at least 100 basis points by year-end. 

• Stock Performance: Key indexes like the S&P 500 and Nasdaq broke below critical levels. Amazon and Nvidia were among notable stocks with significant losses. 

Berkshire Hathaway’s Earnings 

• Earnings Growth: Berkshire Hathaway’s operating profit increased by 15.5% to $11.6 billion, driven by insurance underwriting and interest income. 

• Apple Stake Reduction: Warren Buffett’s Berkshire sold nearly half of its massive Apple stock stake, contributing to cash levels soaring to $276.94 billion from $189 billion on March 31. 

• Stock Buybacks:  company bought back just $345 million of its stock; a reduction compared to prior quarters. 

Nvidia’s AI Chip Delay 

• Delay Impact: Nvidia’s next-gen Blackwell AI chips will be delayed by at least three months due to design flaws, affecting major buyers like Microsoft (MSFT), Google-parent Alphabet (GOOGL), and Meta Platforms (META). 

• Stock Performance: Nvidia stock fell 5.1% last week amid reports of the Justice Department probing its AI dominance. 

Market Reactions and Predictions 

• Dow Jones Futures: Futures for Dow Jones, S&P 500, and Nasdaq will open at 6 p.m. ET on Sunday. Reactions to Buffett’s Apple sales and Nvidia’s chip delay will be pivotal. 

• Market Fear Gauge: The CBOE Volatility Index (VIX) surged to its highest level since March 2023, indicating increased market fear which can signal a short-term bottom. 

Stock Market Analysis 

• Indexes:  Dow Jones fell 2.1%, and Russell 2000 dropped 6.7%, both testing their 50-day lines on Friday.  S&P 500 and Nasdaq lost 2.1% and 3.35%, respectively, falling below the 50-day lines. 

• Sectors: Defensive growth sectors like discount retailers, insurance, and medical stocks held up better, as did utilities and consumer staples. 

Stocks to Watch 

• Apple (AAPL): Rose 0.9% last week, remaining near a key level despite Buffett reducing his stake. 

• Meta Platforms (META): Increased 4.8% but fell below the 50-day line post-earnings. 

• Neurocrine Biosciences (NBIX): Rose 4.3%, entering a buy zone after strong earnings. 

• Ollie’s Bargain Outlet (OLLI): Rebounded from early losses, closing slightly up for the week. 

• MercadoLibre (MELI): Rallied 7.5%, boosted by earnings, entering a buy zone. 

What to Do Now 

Investors should be cautious about new buys and consider reducing exposure to underperforming stocks. Despite market fear suggesting a potential bottom, key indexes and leading stocks need time to repair. Focus on updating watchlists and monitoring defensive sectors. 

Resources 

• IBD Live: Join experts analyzing leading stocks and market trends. 

• Big Picture: Stay updated on market direction and key stock movements. 

Nvidia and MercadoLibre are highlighted on IBD’s Leaderboard and IBD 50 list, respectively.