Stocks started the week mixed, with a rotation out of chipmakers and into other sectors. While geopolitical conditions have improved and oil prices have fallen back into the $80s, boosting most stocks overall, intensified competition from China and concerns about circular financing stemming from Nvidia’s latest talks with OpenAI have sent U.S. and South Korean chipmaker stocks lower.
Nvidia has reportedly entered talks with OpenAI to provide a $250 billion financing guarantee for a data center project. This has deepened investors’ concerns about circular financing within the AI ecosystem, as Nvidia has engaged in several similar deals on a smaller scale. Meanwhile, technological breakthroughs in China’s lithography sector threaten the revenue streams of U.S. companies and ASML. Furthermore, Chinese memory-chip maker CXMT was recently listed on the Shanghai Stock Exchange, adding another significant player to a market traditionally dominated by Micron and two South Korean companies.
The major indices’ returns already reflect these developments. The Dow Jones Industrial Average, which has less exposure to chipmakers, rose 263 points to 52,210. The Nasdaq, a relatively chip-heavy index, declined 0.18% to 24,932. The S&P 500, a more balanced index, ended the day flat at 7,413.
The bond market calmed after lower oil prices eased inflation concerns, although some doubts remain. The five-year U.S. Treasury yield dropped 2 basis points to 4.4%, while the 10-year yield declined 3 basis points to 4.65%.
Today’s durable goods orders continued to demonstrate strong AI-related spending, as orders increased for computers, communications equipment, and electrical equipment.
Tomorrow, the consumer confidence report will be released. Adams Wealth Advisors will return with further updates.