Stock market today: Nvidia slump pressures Nasdaq as stocks mixed to start last week of Q2
06/24/2024 20:52
Stocks are hoping to add a punchline to what's been a high-flying quarter thus far.
Stocks mixed to kick off last week of June, Nvidia extends recent slip
Stocks opened mixed on Monday to kick off the last week of June.
The S&P 500 (^GSPC) fell just below the flatline while the tech-heavy Nasdaq Composite (^IXIC) fell about 0.4%. The Dow Jones Industrial Average (^DJI) rose roughly 0.3%.
Nvidia (NVDA) extended its recent slip from all-time highs after buoying the S&P 500 and Nasdaq to multiple records earlier this month.
Nvidia fell more than 2% at the open.
On the macro front, investors will be keeping a close eye on the Personal Consumption Expenditures (PCE) index due to be released on Friday morning. This index contains the "core" PCE measure, which is most closely watched by the Federal Reserve.
Another head-shaking moment at Under Armour
After the close on Friday, Under Armour (UAA) disclosed an agreement to a securities class action litigation for $434 million.
The 2017 complaint was on behalf of those who purchased Under Armour Class A and Class C shares from September 16, 2015 to November 1, 2019. It alleged that founder and CEO Kevin Plank misrepresented the level of consumer demand for Under Armour products between 3Q15 and 4Q16, misled investors, and defrauded the market under the Securities Exchange Act of 1934.
Upon court approval, all claims against the company and Mr. Plank would be resolved.
The agreement in principle does not admit fault or wrongdoing, and the company consistently denied accusations, and claims sales practices, accounting, and disclosure were appropriate. The settlement rationale is to avoid prolonged litigation, uncertainty, and distraction from the business according to Stifel analyst Jim Duffy.
“The settlement is a negative shock to the balance sheet, and moves the company to a net debt position from a previous net cash position, restricting financial flexibility (share repurchase capacity),” Duffy says.
Another head-shaking moment for the struggling brand. The other came several months go as Plank ousted Stephanie Linnartz to reclaim his CEO position. How the Under Armour board – even considering Plank controls the company via his voting structure – could let this guy run the company again is mind-boggling.
More on UA’s many stumbles below.
The question to start asking on Nvidia
Is Nvidia (NVDA) just too rich from a valuation perspective versus some other strong titans in tech?
Consider this one.
Nvidia shares trade at over 21x forward sales, up from 12x two months ago, points out the team at Creative Planning. This is a material premium over Microsoft (MSFT) at 12x and Apple (AAPL) at 8x.