WSJ What’s News - Nvidia Sheds More Than $200 Billion in Market Value as U.S. Stocks Dip

Episode Date: September 3, 2024

P.M. Edition for Sept. 3. U.S. stocks decline after new data show signs of weakness in the manufacturing sector. Reporter David Uberti explains the downturn. And U.S. dockworkers threaten to strike at East and Gulf Coast ports. Reporter Paul Berger discusses how a strike would affect the U.S. economy. Plus, a former deputy chief of staff for New York Governor Kathy Hochul is charged with being an illegal Chinese agent. Tracie Hunte hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

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kraken's undertaking to register in Canada. NVIDIA sheds more than $200 billion in market value as U.S. stocks tumble on fears of a slowdown. And the threat of a strike looms over some of the busiest U.S. seaports. There have been some analysts who've taken a look at the ports and just their ability to dig out of a backlog of cargo. And just a single day strike would take about five days to clear. Plus, a former staffer for New York Governor Kathy Hochul was arrested and charged today with being an illegal agent for China.

It's Tuesday, September 3rd. I'm Tracy Hunt for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. Let's start with the US markets. They took a beating today as fears of a slowdown creep back following new data about the economy.

Major U.S. indexes finished the session with their worst day since August 5th when concerns about slowing economic growth sparked a global market rout. Tech shares led the way lower, with the Nasdaq composite sinking about 3.3%. The S&P 500 lost roughly 2.1%, while the Dow Jones Industrial Average dropped more than 600 points. So as we just heard, markets took a beating today. New data showed signs of weakness in the manufacturing sector, with the AI chipmaker Nvidia shedding more than $200 billion in market value.

ISM's Purchasing Managers Index, or or PMI came in lower than expected for August and remained in contraction. SMP Global's PMI also stayed in contraction while construction spending data showed a bigger than expected decline. Joining me is Wall Street Journal reporter David Uberti. David, what's going on here? What we saw today with this manufacturing survey is that US factory output declined for probably about the fifth straight month since April. We've had a contraction in the industrial sector and that's really rekindled some of

investors' fears about a slowdown in US economic growth, particularly at this very uncertain and precarious moment for markets in the US economy. Now in addition to that, you mentioned Nvidia. And Nvidia and some of these high-flying technology stocks are very much wrapped up in that larger economic discussion. Depending on how the Fed approaches inflation and interest rates going forward, the sort of cost of borrowing could very much affect

the ways in which companies that buy products from firms such as Nvidia end up investing in some of those very expensive technologies. So investors are really responding to that and trying to position themselves for a very uncertain moment. Why do we see Nvidia taking such a big hit? Well right now this is sort of an extension of what if you recall about a month ago there was this big downturn in US in international markets. There's been a growing amount of skepticism from investors in the US and elsewhere of the sort of cost benefit of AI investments.

These technologies are incredibly expensive. And in earnings reports recently, some of these big tech names that you and I are so familiar with, including NVIDIA, have shown somewhat disappointing, at least from the investors' perspectives, payoffs in terms of revenue and sales growth. Now, granted by any normal person's metric, these companies are killing it and AI is really

producing some really incredible gains. But we're in this weird moment where not only do companies need to meet investors' expectations, but in some senses they need to exceed them in order to see a payoff in their share price at the end of this week We're also getting a new jobs report. What can we expect from that? So this is a very closely watched jobs report last month There was an unexpected slowdown and hiring across the US and that's what contributed to some of the market turmoil at the beginning of August Depending on how the jobs report this Friday plays out We could be back off to the races in stock markets and some of these economic jitters could be overblown. But sort of this

day to day volatility speaks to the uncertainty in Wall Street and elsewhere that could really veer depending on the moment on what manufacturing or what service or what jobs data comes out at any given time. So I would just say buckle up. That was David Uberti, Wall Street Journal reporter. Thank you so much. Thanks for having me. In other news, federal law enforcement officers charged a former deputy chief of staff for New York Governor Kathy Hochul with acting as an illegal Chinese agent. They say she used her position in the administration to promote China's agenda in exchange for millions of dollars.

The Brooklyn U.S. Attorney's Office charged Linda's son with eight criminal counts, including conspiracy to act as an illegal foreign agent, visa fraud, and conspiring to launder money. Her husband, Chris Hu, was also charged with bank fraud and money laundering conspiracies. They were arrested today in their $4.1 million home in Manhasset, New York. Lawyers for the couple didn't immediately respond to requests for comment.

A spokesman for Governor Hokel said Sun was fired back in March 2023 when state officials found evidence of misconduct and they immediately reported her actions to law enforcement. Ukrainian officials say two Russian ballistic missiles today hit a military institute and a hospital in a central Ukrainian city, killing 51 and injuring 271, making it the deadliest strike of the year. The attack highlighted how a shortage of air defense systems is leaving Ukraine vulnerable to Russian strikes.

It also exposed apparent Ukrainian military shortcomings when it came to protecting the training center. Ukrainian President Volodymyr Zelenskyy has pleaded for more missile systems and jet fighters. He also repeated calls to be able to strike deeper into Russia using Western-supplied missiles. Currently, that's something the US and allies bark heave from doing. Coming up, the threat of a walkout hangs over US ports from Maine to Texas. That's after the break. Introducing TD Insurance for Business with customized coverage options for your business. Because at TD Insurance, we understand that your business is unique,

so your business insurance should be too. Whether you're a shop owner, a pet groomer, a contractor, or a consultant, you can get customized coverage for your business. Contact a licensed TD Insurance advisor to learn more. The threat of a strike is looming over U.S. ports as union dockworkers negotiate for better pay. Union officials representing 45,000 workers at ports from Maine to Texas will meet in New Jersey for two days starting tomorrow to discuss wage demands and prepare to strike on October 1st.

The head of the union that represents dock workers at East and Gulf Coast ports said they are at an impasse over wages in talks with employers. Reporter Paul Berger has been covering this story for the Wall Street Journal and he joins us now. So Paul, how did we get here? The dock workers only negotiate their contracts every five or six years. For most people, COVID is in the rear view mirror. But for these dock workers, they're

now looking for a pay increase commensurate with the work they put in and the risks that they took during the pandemic. They perform an extremely vital function that basically helps keep the US economy alive. And it appears that this year they're willing to go all the way in order to get the wage gains that they're looking for.

Do we have any sense of how long a strike could last if it goes into effect on October 1st? I mean, we don't know how long it would last. And the last strike in this part of the US economy was 50 years ago. So we don't really have much to go by. But a strike at these ports would be absolutely devastating. And so a lot of the people I'm talking to are basically saying that if there were to be a strike, which, you know, some people still don't believe

there would be one, but if there were to be a strike, it would probably be pretty short lived because the Biden administration would be forced to come in and try to broker a deal as quickly as possible. You alluded to this, but what kind of impact a strike like this would have on the U.S. economy? There have been some analysts who've taken a look at the ports and just their ability to dig out of a backlog of cargo. And just a single day strike would take about five days to clear. If the dock workers were on strike for a week, it could take four to six weeks to clear the backlog of cargo.

So a potential strike has been brewing for some time. What measures have companies taken to prepare in case there is a strike? A lot of companies have had good warning about this and so what they have tended to do is they've basically brought their goods in for the holiday season early this year. So we saw a massive surge of cargo in May and June and into July of importers bringing the goods in just a little bit earlier than they normally would. Some importers have also been sending their cargo to the west coast,

which for some companies it's possible to do that. But since a significant amount of the cargo needs to be in the eastern part of the country for the holidays, it makes no sense to bring it to the west coast and then bring it by truck or train across the country. So they've just been bringing it in early and they'll be storing it in warehouses and just paying a little bit extra for that That was Paul Berger a Wall Street Journal reporter covering logistics and the supply chain Americans overwhelmingly desire all the trappings of the American dream Owning a home having a family and looking forward to a comfortable retirement home, having a family, and looking forward to a comfortable retirement. But very few believe it's possible. That's according to a Wall Street Journal and National Opinion

Research Center poll of around 1,500 adults. While 89% of respondents said owning a home was important to their future, only 10% said home ownership is easy or somewhat easy to achieve. Wall Street Journal economics reporter Rachel Wolf told the Your Money Briefing podcast that more Americans are feeling discouraged. Rachel Wolf It's never that the American dream has been easy. The point is that it was possible and if you worked hard, probable that you would ultimately get these things like a house, a family, comfortable retirement, that it was within reach if you followed the rules.

And so what we're seeing is that this faith that it's out there for people is plummeting. And it's been this steady decline over the past decade. So it's not just that it has gotten harder, which it has, it's that people no longer believe it's possible for them. The economists that I spoke to were mostly in agreement that people are right to feel that they're shot at the American dream in how it's traditionally defined

have gone down. There are some mitigating factors such as the fact that over the past couple of years wages for the lowest earners have actually outpaced other groups. We've seen a little bit of a turnaround, but it has not been nearly enough to compensate for recent decades. And you can hear more about this in today's Your Money Briefing podcast. And that's what's news for this Tuesday afternoon. Today's show was produced by Anthony Bansi and Pierre Bienneme with supervising producer

Michael Cosmitas. I'm Tracy Hunt for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.