Stocks opened higher Tuesday as investors cheered China's latest round of stimulus measures. And while some disappointing economic data here at home sparked a mid-morning decline, the main indexes recovered by lunchtime as Nvidia (NVDA) stock soared.
Overnight, the People's Bank of China (PBOC) cut its short-term interest rate and lowered the amount of capital reserves banks are required to carry. The PBOC also said it will provide measures to support the country's housing sector.
This helped boost several U.S.-listed Chinese stocks, including e-commerce giant Alibaba Group Holding (BABA, +7.9%) and Temu parent PDD Holdings (PDD, +11.2%).
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Consumer confidence plunged in September
The main benchmarks briefly slipped into negative territory after The Conference Board said its Consumer Confidence Index fell to a lower-than-anticipated 98.7 in September, down sharply from the August reading of 103.3.
"Consumers aren't feeling so rosy this month as the typical complaints about price pressures remained," says José Torres, senior economist at Interactive Brokers. "However, job uncertainty is starting to weigh on sentiments as well," with households expressing unhappiness over fewer working hours and decelerating pay growth, he adds.
Still, the headwinds from the consumer confidence miss quickly abated, with the Dow Jones Industrial Average finishing up 0.2% at 42,208 and the S&P 500 adding 0.3% to 5,732 – new record closes. The Nasdaq Composite gained 0.6% to 18,074.
Nvidia rallies on Blackwell optimism
Helping the main indexes rebound was a big rally in Nvidia, which surged 4.0% – gaining $113 million in market value along the way.
Today's pop came courtesy of a bullish note from Morgan Stanley that suggested Nvidia is seeing strong demand for its Hopper and Blackwell chips. The latter, it says, could see 450,000 units produced in Q4, which creates potential revenue of more than $10 billion for the chipmaker.
Shares of the mega-cap stock are now up nearly 18% since September 6.
Starbucks gets hit with a Sell rating
Starbucks (SBUX) fell 1.1% after Jefferies analyst Andy Barish downgraded the coffee chain to Underperform (the equivalent of Sell) from Hold.
While new CEO Brian Niccol "suggests necessary strategic change is now on the table, we believe execution will be challenged as issues like operations, culture, value perception and tech take time to fix," Barish wrote in a note to clients. He believes fiscal 2025 could be a "'throwaway' year" for Starbucks as it reinvests, stabilizes and then attempts to accelerate its business.
The analyst also lowered his price target on the blue chip stock, to $76 from $80 – representing implied downside of 20% to current levels.
Starbucks has done well on the price charts since the mid-August news that Niccol would be taking over as CEO, up 26% or so. Still, shares remain roughly 2% lower for the year to date.
Visa sued by DOJ
Elsewhere, Visa (V) plunged 5.4% – making it the worst Dow Jones stock today – after media reports indicated the Department of Justice filed an antitrust lawsuit against the financial giant. The DOJ has been preparing a case against Visa that accuses it of illegally monopolizing the debit card market, according to Bloomberg.
"This is still speculation and hard to analyze the actual potential outcomes," says Baird analyst David Koning. And while Koning understand investors' fear of regulatory scrutiny, he maintains an Outperform (the equivalent of a Buy) rating on the large-cap stock given Visa's "high-quality earnings stream, secular growth, and value-added services."
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