Stock rally loses steam as AI darling Nvidia enters correction territory

investmentnews.com:

Stocks struggled to gain traction as an almost $400 billion plunge in Nvidia Corp. raised speculation that the rally in the industry that has powered the bull market was due for a breather.

While several industries outside the technology world advanced on Monday, Nvidia extended a three-day rout to more than 10% — the technical threshold of a correction. The chipmaker at the heart of the artificial-intelligence revolution has recently become the most-expensive stock in the S&P 500. It remains up 140% this year, making it the second-best performer in the benchmark gauge, behind Super Micro Computer Inc., another favorite AI play.

Following a tech-led rally, Deutsche Bank’s Binky Chadha said US equities are set to pause. There’s a lot of good news baked into markets, and if that optimism proves unjustified, there could be downside risks, Lori Calvasina at RBC Capital Markets noted. To John Stoltzfus at Oppenheimer, while the bull market appears sustainable, some profit-taking should be expected.

“We remain concerned about a near-term unwind of many year-to-date leaders,” said Jonathan Krinsky at BTIG. “If the S&P 500 is going to avoid a bigger pullback into July, bulls need to see continued rotation below the surface.”

The S&P 500 fluctuated near 5,460. Energy and financial shares rose as tech retreated. The Nasdaq 100 fell after coming very close to the 20,000 mark last week. Nvidia sank 5.5%. A gauge of chipmakers dropped 2%, with 28 of its 30 stocks down. The Dow Jones Industrial Average outperformed.

Treasury 10-year yields were little changed at 4.26%. Bitcoin slumped below $60,000. Losses are piling up in the crypto market after its second-worst weekly decline of 2024, a reflection of cooling demand for Bitcoin