Dow Jones Futures Fall As China Export Curbs On Nvidia, AMD Slam Chip Stocks


Dow Jones futures fell overnight, along with S&P 500 futures and Nasdaq futures, while government bond yields rose. Nvidia (NVDA) and AMD stocks fell overnight, dragging semiconductors down after saying the US government imposed export restrictions on certain chip sales to China.


The stock market rally made a brief, weak rally attempt on Wednesday, with major indices gaining resistance near the 50-day moving average before turning lower.

On Thursday morning, Chinese EV startups like Nio will release August sales.

Nvidia stock falls on Chinese curbs

Nvidia shares plunged nearly 7% in overnight trading. The chip giant said in an SEC filing that the US government has imposed new licensing requirements that prohibit the sale of certain advanced data center chips to China and Russia. Nvidia said the US is raising concerns about “military end-uses.” Nvidia, which currently doesn’t sell products in Russia, said the restrictions could affect sales of $400 million to China.

The US government is imposing more and more restrictions on high-end chip technology in China.

Nvidia rival Advanced micro-devices (AMD) reported a similar US notification about the sale of various AI-enabled GPUs in China. AMD shares fell 4% in late trading. Taiwan semiconductor manufacturing (TSM), which makes Nvidia chips, fell 2%.

The SMH ETF, which all three chipmakers are a major part of, fell 2% in late trading. Several other chip stocks fell modestly in the wake of the Nvidia and AMD news.

Pure storage (PSTG) headlined the win overnight. PSTG shares jumped on better-than-expected earnings and revenue guidance. Shares fell 1.8% to 28.97 on Wednesday, closing just above the 200-day mark. PSTG shares can test a buy point of 31.62 from a handle cup.

EV sales in China

Early Thursday, Chinese EV Startups Nioz (NIO), Li Auto (LI) and XPeng engines (XPEV) will report August delivery data. EV and battery giant BYD (BYDDF) is likely to report Friday or Saturday. Nio shares, along with shares of Li Auto, Xpeng, BYD and EV giant Tesla (TSLA) are currently struggling.

The new US ban on the sale of certain Nvidia and AMD chips could potentially impact Chinese EV makers, especially those with self-driving or driver-assisted efforts.

With the market rally so weak, investors should be wary of new purchases and take measures to reduce exposure. But they should be looking for potential leaders for their watchlists.

Enphase Energy (ENPH), Pinduo duo (PDD) and NBIX stocks are all consolidating nicely, with relative strength lines at 2022 highs.

Enphase Energy and PSTG stocks are on the IBD 50 list. ENPH shares are also on the IBD Big Cap 20. Neurocrine Life Sciences (NBIX) was the IBD share of the day on Wednesday.

Dow Jones Futures Today

Dow Jones futures fell 0.2% from fair value. S&P 500 futures fell 0.5% and Nasdaq 100 futures fell 0.8%, with AMD and Nvidia stocks pushing the S&P 500 and Nasdaq futures.

Ten-year government bond yields rose by 7 basis points to 3.2%.

Keep in mind that an overnight action in Dow futures and elsewhere does not necessarily lead to actual trading in the next regular trading session.

Join IBD experts as they analyze actionable stocks during the stock market rally on IBD Live

stock market rally

The stock market rally attempted to recover Wednesday morning, but major indices quickly retreated, closing at session lows.

The Dow Jones Industrial Average lost 0.9% in Wednesday’s trading. The S&P 500 index fell 0.8%. The Nasdaq Composite and small-cap Russell 2000 were down 0.6%.

US crude oil futures fell 2.3% to $89.55 a barrel.

Ten-year government bond yields rose by 2 basis points to 3.13%.

Among the top ETFs, the Innovator IBD 50 ETF (FFTY) fell 0.4%. The iShares Expanded Tech-Software Sector ETF (IGV) and VanEck Vectors Semiconductor ETF (SMH) fell 0.7%. TSM, Nvidia and AMD stocks are major SMH holding companies.

SPDR S&P Metals & Mining ETF (XME) fell 0.8%. The Energy Select SPDR ETF (XLE) lost 0.9%. The Health Care Select Sector SPDR Fund (XLV) fell 0.6%.

As a result of more speculative story stocks, ARK Innovation ETF (ARKK) was down 0.1%, while ARK Genomics ETF (ARKG) climbed 1.3%. Tesla stocks are a major holding in Ark Invest’s ETFs. Cathie Wood’s Ark also owns some Nio and BYD stocks.

Five best Chinese stocks to watch right now

EV sales in China

Nio, Li Auto and XPeng report August deliveries ahead of Thursday’s opening. After all three Chinese EV startups hit just over 10,000 deliveries in July, Nio and XPeng may miss that figure slightly in August. Li Auto may not even make it to 5,000.

Nio shares rose 0.6% to 19.95 on Wednesday and floated below the 50-day line. The shares are trading at a base buy point of 24.53 which would mean they are above the 200-day mark.

LI stocks fell 0.1% to 28.77 on Wednesday, again reaching 200-day line resistance.

XPeng shares rose 1.4% to 18.52 on Wednesday, after hitting a 22-month low on Tuesday.

BYD Stock

Meanwhile, BYD is likely to report August sales on Friday or Saturday. Sales of electric vehicles and plug-in hybrids in July increased by 222% from a year earlier to 162,350. There are indications that BYD will set another record in August.

On Monday, BYD reported that first-half profits had tripled from a year earlier, with sales up 60%. That sent the shares slightly higher.

But BYD stock fell 7.8% on Tuesday, followed by a 4.35% loss to 30.75 on Wednesday. Shares of the EV and battery giant have plunged below the 200-day mark after hitting a record high of 43.61 on June 28.

Warren Buffett’s Berkshire Hathaway (BRKB) announced on Tuesday that it sold 1.33 million H shares in Hong Kong on Aug. 24, less than 1% of its large BYD equity stake. Berkshire still owns just under 8% of BYD, but investors worry it will continue to sell shares.

Tesla stock

Tesla isn’t slashing sales in China, but industry data suggests local sales hit 30,000 in August. That excludes exports to Europe and elsewhere. More complete industry data for Tesla will come later in September.

Shares of Tesla fell 0.75% to 275.61 on Wednesday. Shares are holding above the 50-day but falling off the 200-day and 21-day moving averages.

Tesla vs BYD: Which EV Giant is the Best Buy?

Market rally analysis

The stock market rally does not show much struggle. Major indices rose Wednesday morning but quickly hit a wall near the 50-day moving average. They pulled back and eventually closed at session lows.

The Russell 2000 and S&P 400 MidCap retreated to just above their 50-day mark, although they finished slightly below their 10-week averages.

It’s important for the Nasdaq to get back above the 50-day mark, but it certainly wouldn’t be a clear signal for bulls. On the other hand, it wouldn’t take much of a decline to push the shaky market rally into a correction.

The US ban on the sale of certain Nvidia and AMD chips looks set to hit the semiconductor sector on Thursday, with tech futures pointing to further weakness.

Time the Market with IBD .’s ETF Market Strategy

What to do now

The market rally remains under pressure for the time being, but the weakness is clear. Investors should try to take profits and limit losses rather than adding exposure.

Work on your watchlists. Keep looking for possible setups, but be sure to keep an eye out for quality stocks with high relative strength, even if the charts aren’t ripe yet. But stocks can outperform in a weak market until they suddenly falter. And relative winners can still be absolute losers.

Read The Big Picture every day to stay up to date on market direction and leading stocks and sectors.

Follow Ed Carson on Twitter at @IBD_ECarson for stock updates and more.


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The Valley Voice
The Valley Voice
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.


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