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Market Indexes Stay Mixed, Chipmakers Sell Off

We saw plenty of economic data, heard from Fed Chair Powell again, and got more Q2 earnings reports over the course of this trading day, but not much has changed from closing bell to closing bell: the Nasdaq now has a three-day losing streak, albeit by a grand total of 1.3%; the Dow is up three straight days for a whopping total of +0.3%, while the S&P 500 is still relatively flat. The Russell 2000 is down 4.15% since Monday’s close.

The Dow had begun the regular trading session falling 150 points before recovering by lunchtime, only to head back lower but not test daily bottom levels, then closed up moderately. The S&P, Nasdaq and Russell all took that same early afternoon slide and were unable to recover gains by the close. Chip maker stocks led markets lower, with stalwart NVIDIA NVDA giving up 4.4% on the day.

NVIDIA shares are up 44.6% year to date and +87% from this time a year ago. The inventor and market leader of programmable graphics processing units (GPU), trading at nearly $828 per share just a week ago, has been subjected to scrutiny of late. This is liable to happen with any company trading at over 40x earnings, and with GPU-heavy Bitcoin having fallen more than 21% in the past month.

That said, Zacks still carries a #1 rank (Strong Buy) on NVIDIA shares. For an in-depth discussion on this most recent “tech bubble,” check out Zacks Strategist Kevin Cook’s latest on the subject: Tech Bubble 2.0 + Inflation Tsunami: How to Play Them Now

Following Jay Powell’s testimony before House representatives yesterday, he took his tour to the Senate Banking Committee today, again sounding the notes of the Great Reopening having created a “shock to the system” of the economy. This is the main reason his view on inflation continues to be “transitory,” even as a growing number of analysts see inflation being a lot stickier.

However, going by Powell’s track record since maneuvering Fed policy to accommodate challenges at the very start of the Covid-19 pandemic is quite solid. When many analysts were convinced earlier this year that the Great Reopening was going to surge our economy into the stratosphere and that he needed to act immediately to counteract the effects, Powell’s patience has proven to keep the U.S. economy in a healthy state.

Whether or not Powell and the Fed voting members act quickly enough to curb longer-term inflation is very much still an open question. But the 10-year bond yield looks to be in no hurry to go anywhere, still at 1.31% today. As second-guessing the Fed Chair becomes something of a cottage industry among market participants, Powell’s steady hand is thus far a reliable commodity of sorts.

Tomorrow morning, as Q2 earnings reports continue to file in, Retail Sales for June become the economic metric worth paying attention to. Expectations are for a drop of -0.4% on the headline, though this reverses when carving out volatile auto sales to +0.4%. If it bears out, this would illustrate supply disruptions hitting the auto industry — similarly to what we saw with homebuilding input prices a month or two ago — that might be worth looking into further.

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Bitcoin, Like the Internet Itself, Could Change Everything

Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.

Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly. 

See 3 crypto-related stocks now >>

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