June 4th Market Overview

Happy Thursday

Broadcom is going to sell over $100 billion in AI chips next year, and the stock lost about $300 billion today anyway. Let that sink in. The numbers were good, just not good enough, and right now that's all it takes to get crushed. Nobody really has panicked.

The money didn't run, it just slid over into banks and health names, and the Dow closed at a record. A market that can take a punch like that and still hit a new high is in good shape.

Let’s dig in...

Today's Big Picture

1. Broadcom's Miss Sparks a Rotation 

Broadcom $AVGO beat on earnings, but its AI chip forecast came in below what Wall Street was hoping for. Investors took it as a reason to book profits on chips and rotate into banks and health insurers. Around $300 billion in market value vanished in one session, one of the worst single-day losses ever. I think it's a healthy breather, trees don't grow to the sky.

2. Oil Eases, but the Supply Math Stays Tight

Crude pulled back after Israel and Lebanon agreed to renew their ceasefire, clearing a roadblock in the US-Iran talks. Look past the price and the picture is tighter: spare supply is thin and the Strait of Hormuz is still choked. A deal might not fix the underlying math.

3. Bitcoin's Worst Week Since February 

Bitcoin is getting hit hard and has lost its grip on the market's attention. The trigger came today. Strategy, the biggest corporate holder, sold Bitcoin for the first time since 2022. It was a small slice of their pile, but when the loudest buyer turns seller, people notice. The money is rotating into the chip rebound and new listings instead.

Market Overview

Index Performance

Stock Spotlight

UnitedHealth $UNH ( ▲ 5.56% )  
led the Dow after Bank of America upgraded it to Buy and lifted its target to $450. Cooling medical costs are setting up a cleaner earnings picture for the rest of the year.

CrowdStrike $CRWD ( ▼ 3.72% )  
had its worst day since 2024 on soft second-quarter guidance. The CEO said new AI models are helping hackers build threats faster than before.

Quantinuum $QNT ( 0.0% )  
opened at $68 in its trading debut after pricing at $60, raising over $1.6 billion. The quantum computing firm was spun out of Honeywell and Cambridge Quantum back in 2021.

Big Name Updates

Nvidia $NVDA ( ▲ 2.5% )  
shook off an early drop and turned higher, doing most of the work to pull the Nasdaq back into the green. The dip buyers showed up fast.

Alphabet $GOOGL ( ▲ 3.32% )  
rose even as chips sold off, a sign the market is starting to separate the real AI winners from the rest.

Goldman Sachs $GS ( ▲ 5.0% )  
gained as it takes the lead role on the SpaceX listing. The deal flow is spilling into the bank running it.

Netflix $NFLX ( ▲ 0.14% )  
held its outperform rating at Bernstein, which argues the market is ignoring the long-term earnings power of its ad business.

Other Notable Company News

Blackstone $BX ( ▲ 8.01% )  
rose even after capping withdrawals from a private credit fund. Rivals Ares and KKR moved up with it.

Humana $HUM ( ▲ 6.99% )  
climbed even though Morgan Stanley kept its bearish rating. The firm did raise its price target, which the market chose to focus on.

Elanco $ELAN ( ▲ 0.65% )  
rose after the first US screwworm case in livestock since 1966 lifted demand for its treatments.

Strategy $MSTR ( ▲ 2.44% )  
sold Bitcoin for the first time since 2022, a small slug that still rattled crypto traders.

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Sector Watch

Bond Market

Quiet day. The 10-year yield drifted a little lower and basically sat where it's been all week, around 4.45%. That's the calm before Friday. The May jobs report drops in the morning, and that number will do more to move rates than anything that happened today. Bonds are waiting, same as the rest of us.

Policy Watch

The job market is softening a bit, but nothing's breaking.

• Weekly jobless claims hit their highest level since early February.

• First quarter productivity came in a little under what economists expected.

I'm not losing sleep over the jobs numbers yet. We're coming off some of the lowest claims in history, so a small bump up is really just things settling back to normal.

Overseas is where it gets interesting.

• The House voted to end the war with Iran. People wanmt out of this conflict and I think the market has been reflecting that cleanly so far.

• Japan's central bank is hinting it might raise rates at its mid June meeting.

If Japan raises rates, we could see a massive unwind of currency trades that will ripple through our markets.

What to Watch

The AI company quietly automating every Walmart distribution center. 
23 billion in orders on the book.

It's just one of seven names in this free MarketBeat report.

May Jobs Report

Friday brings the official labor reading. I want to see whether the small uptick in weekly claims shows up as an actual hiring slowdown.

Cattle and Beef Prices 
The USDA confirmed a flesh-eating parasite in US livestock for the first time in decades. Cattle futures are already climbing, and higher beef prices at the store could follow.

Thanks for reading - you are now the more informed 🙂

- John

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