Tech Stocks In Focus As Nasdaq Bounces From Lows: Markets Wrap

Asian technology stocks perked up in early trade after dip buyers helped lift US stocks from their lowest levels of the day.

South Korea’s Kospi index rose over 1%, led by a gain in Samsung Electronics Co. shares. LG Display Co. climbed in Seoul while Advantest Corp. jumped 4% in Tokyo. The S&P 500 fell 0.2% and the Nasdaq 100 retreated 0.6%, still above the lowest levels of the day. Oil held its gains after a report showed a drawdown in US reserves. Treasuries steadied Thursday after climbing across the curve in the prior session.

The rotation out of technology stocks following a steep rally since April has fueled concern among investors that the surge may have gone too far, too quickly. Still, markets remain in wait-and-see mode as central bankers convene in Jackson Hole, with investors looking ahead to remarks from Federal Reserve Chairman Jerome Powell. 

“There remains a bearish skew for equities at the moment,” said Kyle Rodda, a senior market analyst at Capital.com in Melbourne. “Equity prices are beginning to reflect the risk of disappointment at Jackson Hole, with doubts circulating about whether the Fed will pivot as aggressively in the dovish direction implied by rates markets – or even pivot at all.”

Technology stocks dropped Wednesday with the Nasdaq 100 index declining for a second consecutive day Wednesday. A gauge of the so-called ‘Magnificent Seven’ large cap tech firms fell for a fourth consecutive day, the longest losing streak since mid April.

US stocks are “in the early days” of a bubble, although the critical point for a correction has yet to come, Oaktree Capital Management LP co-founder Howard Marks cautioned. 

Declines for US megacaps dragged down the S&P 500 for a fourth straight session Wednesday, despite a bounce off session lows. While most major groups in the US equity benchmark finished higher, some strategists warned that the extra-heavy weighting of tech giants may turn the “rotation” out of the sector into a broader rout.

“Rotation can only take place if the tech stocks hold up,” said Matt Maley at Miller Tabak. “If they decline, the only rotation we’ll see will be into cash.”

Meanwhile, minutes of the Federal Open Market Committee’s July 29-30 meeting showed most Fed officials highlighted inflation risks as outweighing concerns over the labor market at their meeting last month, as tariffs fueled a growing divide within the central bank’s rate-setting committee.

Officials acknowledged worries over higher inflation and weaker employment, but a majority of the 18 policymakers in attendance “judged the upside risk to inflation as the greater of these two risks,” according to the minutes.

“The Fed will cut in September absent a re-tightening of the labor market combined with adverse inflation news,” Marco Casiraghi at Evercore said. He noted as a sign of stability, that the Fed minutes showed almost all participants believe the central bank “was well positioned to respond in a timely way to potential economic developments.”

In other Fed news, Governor Lisa Cook signaled her intention to remain at the central bank in defiance of calls for her resignation by President Donald Trump over allegations of mortgage fraud.

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 9:41 a.m. Tokyo time

• Hang Seng futures rose 0.2%

• Nikkei 225 futures (OSE) fell 0.4%

• Japan’s Topix fell 0.5%

• Australia’s S&P/ASX 200 rose 0.6%

• Euro Stoxx 50 futures rose 0.1%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.1645

• The Japanese yen was little changed at 147.40 per dollar

• The offshore yuan was unchanged at 7.1820 per dollar

• The Australian dollar was little changed at $0.6433

Cryptocurrencies

• Bitcoin was little changed at $114,294.59

• Ether fell 0.7% to $4,326.16

Bonds

• The yield on 10-year Treasuries was unchanged at 4.29%

• Australia’s 10-year yield declined three basis points to 4.27%

Commodities

• West Texas Intermediate crude rose 0.2% to $62.86 a barrel

• Spot gold fell 0.2% to $3,342.93 an ounce