Market Today: Nvidia Faces China Pushback, Rocket Lab Soars, and More

China’s Economic Measures

The market’s attention was largely focused on China during the past week, as the country’s officials announced a raft of measures aimed at boosting consumption, property demand, and stock market liquidity. The People’s Bank of China lowered its reserve requirement ratio, the repurchase rate, the medium-term lending facility rate, and hinted at a potential cut to the loan prime rate. A flood of fiscal spending was also announced with upcoming bond issuance expected to reach roughly half of the amount spent to counter the Great Financial Crisis.

Chinese equities soared in response with the Shanghai Composite and Hong Kong’s Hang Seng jumping 13.0% for the week. Risk assets in Europe and the U.S. also showed strength, though ongoing pressure on the price of crude kept growth concerns at the back of the market’s mind.

There was also renewed strength in semiconductor names after Micron (MU, Financial) beat quarterly expectations and issued strong guidance. The stock rallied to a two-month high, taking the PHLX Semiconductor Index for the ride (+4.3% for the week). Longer-dated Treasuries ended the week with slight losses while the 2-yr note eked out a gain as rate cut expectations increased. At the end of the week, the fed funds futures market was pointing to a 54.8% implied likelihood of another 50-basis point cut in November, up from 50.4% a week ago.

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Today’s News

Nvidia (NVDA, Financial) is experiencing regulatory pressure from China, discouraging local companies from purchasing its chips, including the H20. This move is part of China’s strategy to boost its domestic AI chipmakers like Cambricon and Huawei, reducing reliance on U.S. technology. Nvidia shares slipped 3% on Friday, although the company still derives 12% of its revenue from China and Hong Kong.

Rocket Lab U.S.A. (RKLB, Financial) saw a significant boost in its stock price, jumping to a new 52-week high of $10.29 on Friday. This surge followed KeyBanc Capital Markets’ endorsement, raising its price target to $11 from $8. The company recently completed testing its second Pioneer spacecraft for Varda Space Industries, making it the only company to secure a second reentry license from the FAA.

Intel (INTC, Financial) and Micron Technology (MU, Financial) both ended their six-day winning streaks amid broader declines in semiconductor stocks. INTC finished 0.08% lower at $23.90, while MU was down 2.18% to $107.49. Despite the dip, Intel has seen a 14.31% gain over the last six trading sessions, driven by strong performance and market sentiment.

Disney (DIS, Financial) received a mixed update from J.P. Morgan, which lowered its Q4 earnings estimates by 1.8% to $3.72B due to a loss of carriage with DirecTV and a two-day shutdown at Shanghai Disneyland. However, they remain bullish on the stock, maintaining a positive outlook for Disney+ and Hulu net additions.

McDonald’s (MCD, Financial) continued its upward trend, closing 0.02% higher at $303.70 on Friday. The company recently raised its quarterly dividend by 6% to $1.77 per share and has seen positive traffic trends, partly driven by the success of its new Collector’s Meal.

Broadcom (AVGO, Financial) ended a six-session winning streak, closing 3% lower at $172.7 on Friday. Despite the decline, the stock has gained nearly 60% this year. Analysts remain bullish, with a majority giving it a Buy rating.

Apple (AAPL, Financial) is expected to launch a new version of its Vision Pro mixed reality headset in 2025, powered by the M5 chip. This update aims to enhance the user experience significantly, potentially integrating advanced AI functionalities.

Achieve Life Sciences (ACHV, Financial), INmune Bio (INMB, Financial), and LENZ Therapeutics (LENZ) saw their shares rise on Friday following bullish recommendations from Raymond James. ACHV received a strong buy rating with a $20 price target, while INMB was rated Outperform with an $18 price target.

Amazon (AMZN, Financial) faced labor challenges as more contract drivers at its DBK4 facility in Queens, New York, formed a union with the International Brotherhood of Teamsters. This follows a similar move by drivers at three other delivery partners last week.

Carnival Corporation (CCL, Financial) is set to report its Q3 earnings on Monday, with analysts expecting a 30% rise in EPS to $1.15 and a 14% increase in revenue to $7.81 billion. The cruise industry has seen a strong recovery post-COVID, although analysts caution that demand may wane in 2025.

Omega Healthcare Investors (OHI) filed for an automatic shelf registration for a potential mixed shelf offering. The company has seen gains for seven consecutive sessions and recently raised its 2024 guidance following a strong Q2 performance.

Archrock (AROC) and Kodiak Gas Services (KGS) gained modestly after Citi initiated coverage with Buy ratings and price targets of $24 and $35, respectively. The tight compression market and increasing natural gas demand are expected to benefit these companies significantly.

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