Big tech stocks continue to struggle, and a shift to the equities that have been neglected in recent weeks is taking place. Optimistic investors are rejoicing at the broadening base of equities' advance this year, while pessimists are wondering whether the market's spearheads are in danger of undergoing a correction.

Nvidia plunged 6.7 yesterday, taking along with it Broadcom, Qualcomm, Dexcom, Marvell, Cadence Design and even ASML in Europe. Within the S&P500 index, the semiconductor industry ended the day down -4.7%.

The movement that began on Friday with the monthly and quarterly sell-off is gaining momentum. People who were still buying into artificial intelligence stocks in the middle of last week are explaining that, well, it's normal, it's the end of the quarter, so we're taking our profits and rebalancing our portfolios. We're stocking up on UnitedHealth rather than Super Micro Computer.

Well-wired financial professionals have been warning of this risk in recent weeks. What needs to be stressed is that there is no overall market sell-off, but rather an arbitrage in favor of more traditional sectors. Sectors that have generally been depressing investors for some time. This explains why, in New York, a Nasdaq ETF lost 1.1% yesterday, while a Dow Jones ETF gained 0.67%. Such a 1.7% gap between the two indices has already occurred this year, but it's quite rare. The Dow Jones benefited from the good performance of financials (Goldman Sachs, JPMorgan Chase), healthcare (UnitedHealth, Amgen), oil (Chevron), consumer goods (Walmart, Coca-Cola) and telecoms (Verizon).

For the third session in a row, investors favored low-valued stocks over growth stocks. It's not the first time this has happened in the last two years. Whether it will last remains to be seen.

In Europe, stock markets rose yesterday, as investors wait to see how French politics will fare over the coming weekend and beyond.

In other news, bitcoin also got sobered up. It plunged below the USD 60,000 mark, before rebounding slightly this morning. The cryptocurrency peaked at USD 73,802 last March and is still holding on to around 40% of its January1 level. In China, Premier Li Qiang called on trading partners not to decouple economies during his opening speech at the World Economic Forum. Financiers will be keeping a close eye on the four statistics published today, in particular on activity indices and consumer confidence.

In the Asia-Pacific region, the Japanese have also set their sights on discounted stocks and have pushed down the technology sector. The operation didn't work so badly, with the Nikkei 225 gaining 1.1% at the end of the day. The ploy also worked in Australia, where the stock market is richer in financials and mining than in digital stocks: plus 1.1% for the ASX. India and South Korea also fared well, with gains of around 0.4%. In China, Shanghai lost a little ground, while Hong Kong clawed back 0.3% in an attempt to break out of its one-month lows. European leading indicators are rather bearish due to the closing gap with Wall Street. Futures on Wall Street are mixed today.

Today’s economic highlights:

The Chicago Fed Activity Index will be followed by the FHFA house price index and the Richmond Fed and Conference Board indices. The full agenda is here. 

The dollar is up to EUR 0.9338 and GBP 0.7886. The ounce of gold is stable at USD 2,328. Oil is firm, with North Sea Brent at USD 84.74 a barrel and US light crude WTI at USD 81.08. The yield on 10-year US debt is holding steady at 4.25%. Bitcoin trades at USD 61,000.

In corporate news:

  • Nvidia, which has lost more than 16% since its recent peak, rebounded by 2.1% before the opening on Tuesday following three consecutive sessions of declines that erased $430 billion in market capitalization. Following Nvidia's lead, Micron Technology, Broadcom, Super Micro Computer, and Qualcomm experienced gains of 1% to 2% in pre-market trading.
  • Boeing has proposed to acquire Spirit AeroSystems for $35 per share, a deal that is to be primarily financed through a capital issue, as reported by Bloomberg News. In pre-market trading, Boeing's shares fell by 0.5%, while Spirit's shares dropped by 6.3% to $31.
  • Apple reportedly rejected Meta Platforms' proposal several months ago to integrate the latter's AI-based chatbot into iPhones, according to Bloomberg News.
  • The European Commission has charged Microsoft with illegally bundling its Teams messaging and video application with the Office suite, stating that Microsoft's recent efforts to separate the services are inadequate.
  • Tesla is set to recall 11,688 Cybertruck electric vans due to an issue with the windshield wiper that could impair visibility and increase the risk of accidents, as announced by the U.S. National Highway Traffic Safety Administration (NHTSA).
  • Trump Media & Technology Group saw its shares climb an additional 14.2% in pre-market trading on Tuesday, after a surge of around 20%. The company, majority-owned by former President Donald Trump and responsible for the Truth Social platform, announced an expected inflow of $69.4 million from the exercise of warrants on June 20 and 21.

Analyst recommendations:

  • Capri Holdings Limited: Wells Fargo upgrades to overweight from equalweight with a target price reduced from USD 57 to USD 43.
  • Doubleverify Holdings, Inc.: Morgan Stanley downgrades to equalwt from overwt with a price target reduced from USD 40 to USD 21.
  • Penn Entertainment, Inc.: Raymond James downgrades to market perform from outperform.
  • Adobe Inc.: President Capital Management Corp maintains its buy recommendation and raises the target price from USD 613 to USD 625.
  • Albemarle Corporation: Piper Sandler & Co maintains its underweight recommendation and reduces the target price from USD 122 to USD 95.
  • Alnylam Pharmaceuticals, Inc.: BMO Capital Markets maintains its outperform rating and raises the target price from USD 234 to USD 260. 
  • Broadcom Inc.: President Capital Management Corp maintains its buy recommendation and raises the target price from USD 1620 to USD 1930.
  • Celanese Corporation: Jefferies remains at a hold recommendation with a price target reduced from USD 170 to USD 155. 
  • Church & Dwight Co., Inc.: Consumer Edge Research maintains its equalweight recommendation and raises the target price from USD 106 to USD 116.
  • Ebay Inc.: Wells Fargo maintains its equalweight recommendation and raises the target price from USD 47 to USD 57.
  • Eli Lilly And Company: Truist Securities maintains its buy recommendation and raises the target price from USD 892 to USD 1000.
  • Admiral Group Plc: Berenberg upgrades to buy from hold with a price target raised from GBX 2973 to GBX 3127.
  • Direct Line Insurance Group Plc: Berenberg downgrades to hold from buy with a target price of GBX 220.
  • International Consolidated Airlines Group, S.a.: Goodbody downgrades to hold from buy with a price target raised from GBX 174 to GBX 175.