Markets were shook by headlines on tech and finance, as Trump caused controversy when he cut $4.9 billion in spending without Congress’ approval. Elon Musk also battled the SEC over delayed Twitter stock disclosures.
Markets were jittery after the Fed announced its September rate-cut plans. July’s inflation figures also hit a 5-month high of 2.9%.
Take a look at today’s most popular stories.
Tech stocks slide amid AI concerns
The tech sector as a whole took a hit on Thursday. Dell and Nvidia were both affected.
Dell was the most affected, with a drop of about 7% following a weak forecast for the quarter. Analysts had expected a much higher level of sales for their AI servers, given the buzz around artificial intelligence infrastructure.
Nvidia wasn’t spared either. Its stock fell about 3% during the early trade.
Investors have become so accustomed to Nvidia’s astronomical numbers, that any less is viewed as a disappointment. People are also worried that their growth has slowed down.
Alibaba, a Chinese company that is developing AI chips that compete with Nvidia’s products, made the situation worse for Nvidia.
This is exactly what Nvidia’s investors have been fearing, particularly coming from China. The market in China is enormous. Click here to read the full report
Trump’s shockwave of $4.9B hits Washington
Donald Trump has just used a tactic that Congress hadn’t seen in nearly 50 years. He cut $4.9 billion from federal spending, without first getting the permission of Congress.
It is a pocket rescission, which basically means to wait until the fiscal end to cancel the money.
The majority of cuts will be made to foreign aid programs administered by USAID and the State Department.
Trump has been trying to cut down on the amount of money America spends in helping foreign countries for years. It was important to announce it late enough in the year for money to be spent.
The Congress, not only the Democrats, are not pleased with this. Senior Republican Senators also object, claiming that Trump has stepped on the constitutional authority of Congress to control spending.
Musk fights SEC for Twitter stake
Elon Musk wants to avoid the SEC’s lawsuit against him over Twitter stock purchase. He has asked a federal court to throw out the entire case.
Lawyers for the man claim that the delay in disclosure is an honest mistake, and that the owner of 9.2% shares came forward as soon as they realized their error.
According to the SEC, Musk violated securities laws by waiting too long (11 days) before telling investors of his large stake in Twitter in 2022.
The theory goes that by delaying the purchase of shares, he could continue to buy them at a lower price before anyone realized he had accumulated a large position.
Musk’s lawyers are retaliating, saying that the government is overreaching and the SEC is asking for a $150 million fine which is unconstitutional and excessive.
Core inflation reaches five-month peak
The July inflation figures were higher than expected, and core prices reached a new five-month record.
The overall inflation rate remained at 2.6%, as expected. However, when food and gasoline are removed, it rose to 2.9%.
It’s interesting that people continued to spend money in spite of these pressures on prices. The increase in income helped to boost consumer spending by 0.5%.
The Fed is in a difficult position. The Fed has been hinting that they may cut interest rates at their September meeting, but the inflation rate of 2.9% puts them far away from their target of 2%. Click here to read the full report
The post Evening Digest: Markets react to Trump’s spending cuts, Musk SEC confrontation, Nvidia crash appeared first on ICD
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