On Thursday, Nvidia’s (NVDA) relentless uptrend finally paused. The stock fell by 3.54% to close at $130.78. It briefly traded above $140 intra-day. Short-sellers are absent, unwilling to bet against the optimism surrounding Nvidia and the AI chip supplier market.
When it comes to interest rate policy, central banks are divided. The Swiss National Bank cut rates to 1.25% on Thursday. This follows its March interest rate cut. More recently, the European Central Bank cut rates from 3.75% to 4.0%. They followed through on their pledge to cut rates. However, inflation worries persist.
Canada cut interest rates by 25 bps. This will weaken the country’s currency considerably. Canadian investors should consider holding U.S. assets and U.S.-denominated securities. This offsets the weakness in the Canadian dollar.
Economic News
On Thursday, weekly jobless claims fell by 5,000 to 238,000. Housing construction dropped to a nearly four-year low, to 5.5%. Permits slipped to 3.8%. The data suggests that the Federal Reserve will not cut rates at the September meeting. Throughout 2024, stock markets rallied on the belief that rates would fall. That has yet to happen.
Investors may accumulate TLT, IEF, and BOND ETFs if they believe that interest rates will fall.
Weak homebuilding activity is negative for Lennar (LEN) and KB Home (KBH). KBH stock is showing signs of weakness. Avoid both.
