Nasdaq 100 analysis: Meta and Apple shares fall from highs

US futures fall

• Dow Jones Industrial Average is down 0.3%
• S&P 500 is down 0.5%
• Nasdaq 100 is down 0.6%

Markets have pulled back this week, with indices having fallen since the S&P 500 and Nasdaq 100 hit highs last Friday. Hawkish central banks has been the central theme as they stress more tightening is needed to tame inflation, which will not only continue to lift interest rates but also increase the risk of a recession.

Fed chair Jerome Powell continued to stress more hikes are needed during his second day of testimony to Congress yesterday. The Fed has pointed toward two more rate increases before the end of 2023, but this is still at odds with markets that only see one more hike in July before the pause button is pressed and a pivot happens in 2024.

With that in mind, markets will be keeping an eye on US flash PMIs and speeches from several other Fed members today.

Most discussed Reddit stocks

Below is a list of the top 10 most mentioned US stocks on the WallStreetBets thread on Reddit over the last 24 hours on June 23, 2023, according to data from Quiver Quantitative. Exchange-Traded Funds (ETFs) and other instruments have been excluded:

1. Tesla
2. NVIDIA
3. Advanced Micro Devices
4. Apple
5. Visa
6. C3.ai
7. Amazon
8. Virgin Galactic
9. Meta
10. Carnival

Most active US stocks before the bell

Below are the most active stocks with a valuation of at least $50 million before the bell, based on trading data taken from Bloomberg:

1. Faraday Future Intelligent
2. Nikola
3. Virgin Galactic
4. Tesla
5. IonQ
6. Ideanomics
7. Lucid Group
8. Amazon
9. Palantir
10. Beneficient

US premarket winners and losers

Here are the stocks worth at least $50 million experiencing the sharpest movements in premarket trade, according to data from Bloomberg:

Top US stocks to watch

Apple closed at fresh all-time highs of $187 yesterday but is down 0.4% before the bell. The iPhone maker is holding up better than the wider market as the rally in tech shares takes a breather, with Apple’s reliable earnings, cashflow and returns appealing to investors. Apple is thought to be holding early discussions with HDFC Bank about launching its Apple Card in India, according to reports from Moneycontrol.com. Unnamed sources that CEO Tim Cook met with HDFC CEO Sashidhar Jagdishan when visiting India last month.

Meta closed at fresh 18-month highs yesterday but is also pulling back today, with the social media giant down 0.5% before the bell. Meta shares have more than doubled in value in 2023 and been one of the best performers as it recovers the heavy ground lost when the advertising market started to feel the heat in 2022, although it remains well below its pandemic-induced highs we saw back in 2021.

Amazon closed at nine-month highs yesterday after announcing it was investing $100 million to set up a new AWS Generative AI Innovation Center to help customers improve their artificial intelligence and machine learning applications with the hope of boosting income for its cloud computing arm. The stock is up another 0.2% this morning.

Meanwhile, iRobot shares are up 0.4% after plunging over 8% yesterday on reports EU regulators were set to launch a full-scale investigation into its proposed takeover by Amazon. Over in London, online grocer and automated warehouse maker Ocado Group is down 7.5% after popping over 30% yesterday on reports Amazon and another major tech player were considering launching a takeover bid.

The surge in Tesla shares continues to be tested. The electric carmaker is down 0.7% today and remains below the nine month high hit on Wednesday after Barclays and Morgan Stanley warned it has rallied too high, too quickly and approaching fair value. ‘Tesla is showing signs that it’s ripe for a correction,’ chief market strategist at Miller Tabak & Co, Matt Maley, told Bloomberg. Tesla was the most overbought stock in the S&P 500 when it hit highs this week and while the pullback has changed that, it is still boasts the eighth highest Relative Strength Index. The latest customs figures out from China showed over 6,200 cars were exported to Canada in May, up from just 88 the year before. Much of that is expected to have been driven by Tesla after it started shipping cars from Shanghai and into Canada.

NVIDIA is trailing 0.7% this morning as its rally continues to stutter since hitting all-time highs earlier this week. The chipmaker, which has become Wall Street’s favourite AI play this year, is still in overbought territory and boasting over a 75% premium to its semiconductor rivals, with the stock trading at over 50 times earnings estimates over the next 12 months! We have seen investors willing to pay over the odds to gain exposure to NVIDIA’s AI growth, but it appears the price of admission has reached high enough to discourage some from jumping on the ride.

Rival chipmaker AMD is down 0.4% and on course to lose ground for a fifth consecutive session, with this week’s reversal sending it to a one-month low! AMD is still up 73% since the start of 2023 and continues to boast a premium over its competitors and the wider market.

C3.ai is down 1% and on course to fall for a fifth consecutive session after climbing to 20-month highs last week as the momentum behind the AI rally eases. The company failed to revive sentiment when it held its investor day yesterday. CFO Juho Parkkinen said its pipeline is ‘basically double’ where it was last year thanks to eruption of interest in AI and that sales cycles have shortened to under four months from over a year as firms race to deploy the new technology.

US banks are under the spotlight, with the KBW Bank Index hitting June-lows yesterday after the Federal Deposit Insurance Scheme and Federal Reserve said they were considering expanding the stricter capital rules being implemented following the banking crisis back in March to institutions with over $100 billion worth of assets. JPMorgan, Citigroup, Wells Fargo and Bank of America are all down 0.4% to 0.5% this morning.

Virgin Galactic is down over 13%. The company, which has rocketed higher since announcing it will begin commercial operations by the end of this month, is slumping after announcing it will sell up to $400 million worth of shares to raise funds for its spacecraft and infrastructure. The move has not been welcomed by markets that are fearful about the dilution considering Virgin Galactic is currently only worth $1.5 billion. However, the timing appears significant as the recent rally means it can raise funds by issuing fewer shares than it would have a couple of weeks ago.

Robinhood is down 0.3% and building on the losses yesterday, when it announced it will buy credit card company X1 for $95 million in cash. That is part of Robinhood’s efforts to diversify out of the volatile trading industry and it is hoping to complete the deal in the third quarter. X1’s co-founders are joining Robinhood. Notably, Ark Invest, run by Cathie Wood, bought over 560,000 shares in Robinhood after the deal was announced.

Crypto stocks remain in play as bitcoin continues to hold above $30,000 after returning above the threshold this week for the first time in two months. Coinbase is down 1%, MicroStrategy is up 0.2% and Riot Platforms is trailing 0.4%.

Carnival is down 0.1% as its recent surge, which sent the cruise liner to 13-month highs earlier this week, falters. It has been the fourth best performer in the S&P 500 this year amid a broader rally among its peers as the industry continues to recover from the pandemic. Carnival shares are likely to keep treading water until it releases results on Monday. Bookings are at all-time highs and it is generating cash again, and this is set to be the second quarter of positive adjusted Ebitda.

3M is up 3.6% after agreeing to pay $10.3 billion over the next 13 years to settle claims relating to so-called forever chemicals polluting drinking water across the US. It did not admit liability but the money will go toward remediation works. Analysts said the development removes some significant financial and legal risks but highlighted headwinds from other legal matters. Bloomberg Intelligence said ongoing claims not covered by the settlement, such as natural resource and personal injury cases, could add another $10 billion to $15 billion in costs.

Boeing is down 0.4% and at June-lows after announcing it will invest $100 million into infrastructure and pilot training programmes in India, according to a statement out from the White House. That follows on from Air India ordering over 200 jets from Boeing this week. However, the news is not enough to revive sentiment after it took a hit from news its major supplier Spirit Aerosystems, which is rebounding 0.8% today, is suspending output at one of its plant because workers voted to take strike action.

CarMax is up 5.9% after smashing earnings expectations in the latest quarter. Adjusted EPS of $1.44 ran the $0.80 forecast off the road even as sales remained under pressure, falling 17% to $7.69 billion.