Chip Stocks Slide Ahead of Nvidia Earnings as Asian Markets Dip
Global markets opened the week on a cautious note, with chip stocks leading declines amid investor anticipation of Nvidia's earnings report scheduled for Wednesday. This report is expected to significantly influence AI-related stock trading for the remainder of 2026. Asian markets showed mixed performance, with South Korea's KOSPI index dropping 2%, Shanghai down 0.4%, and Hong Kong's Hang Seng falling 0.2%, while Japan's Nikkei edged up slightly by 0.1%. In the US, futures indicated modest gains following yesterday's tech sector sell-off, with Nasdaq futures rising about 0.2%, S&P 500 futures up 0.1%, and Dow Jones futures increasing 0.05%.
Yesterday's trading on Wall Street ended mixed, with the Dow Jones gaining 0.2% but the S&P 500 and Nasdaq retreating by 0.25% and 0.5%, respectively, pressured by a 1.6% drop in the technology sector. Chip manufacturers and memory stocks, including Nvidia, Sandisk, Seagate, Micron Technology, and Western Digital, faced significant sell-offs. Nvidia's stock fell for the seventh consecutive day, its longest losing streak since September 2022, amid reports of rising AI server costs. Conversely, defensive sectors like discount retail and essential consumer goods saw gains of about 1%, with Visa shares hitting a 52-week high after rising 3%.
Commodity prices showed moderate increases, with Brent crude rising 0.3% to $92.46 per barrel and WTI up 0.45% to $85.41. The Israeli shekel-dollar interbank rate is expected to open near 3.0015. Bitcoin surged 3.1% to $79,739, nearing $80,000, driven by nearly $2 billion raised in spot ETFs and a $4 billion short squeeze. Analysts at Fundstrat view this rally as more than a tactical correction, while BTIG cautions about potential volatility based on past patterns.
In Tel Aviv, the local market is expected to open lower, with the TA-35 index projected to drop about 1.1% due to negative arbitrage with Wall Street. Gains in Kamtek (2.1%) and Nova (1.1%) are unlikely to offset pressure from Tower (0.8%), Enlight (0.5%), and Elbit Systems (0.2%). Morgan Stanley warns that financial markets are entering a new-old era marked by higher volatility, persistent inflation above 2%, and rising bond yields, similar to the post-World War II period. They recommend focusing on large-cap quality stocks, AI-adopting companies, and sectors like finance, industry, and cyclical consumer goods within the S&P 500.
