The Market News Today: XLK Rebalance to Boost Nvidia, Cut Apple Weight

Nvidia’s Rally Prompts $10 Billion Tech ETF Rebalance

Nvidia’s sharp rally will prompt the Technology Select Sector SPDR Fund (XLK) to rebalance, acquiring over $10 billion of Nvidia shares while significantly reducing Apple’s weight. Microsoft, Nvidia, and Apple will have weights around 21%, 21%, and 4.5% respectively, due to diversification rules. This change highlights how passive index funds can diverge, affecting exposures. The rebalance, based on market cap adjustments, will take effect at the end of this week.

Supreme Court to Hear Nvidia’s Securities Fraud Case

The U.S. Supreme Court will hear Nvidia’s appeal to dismiss a securities fraud lawsuit accusing the AI chipmaker of misleading investors about its sales to the cryptocurrency industry. The case, revived by a lower court, alleges that Nvidia and its CEO made false statements about the impact of cryptomining on revenue. Nvidia argues that the ruling could lead to speculative litigation. The Supreme Court will also hear a similar case involving Meta.

Fed May Cut Interest Rate This Year, Says Harker

Philadelphia Fed President Patrick Harker indicated that the Federal Reserve might cut its benchmark interest rate once this year if economic conditions align with his forecast. He anticipates slowing but above-trend growth, a modest rise in unemployment, and a gradual return to target inflation. The Fed recently kept rates unchanged at 5.25-5.50%, aiming to cool inflation. Harker emphasized the need for further data analysis before making a final decision on rate cuts.

Tech Stocks Boost Nasdaq; Nvidia Hits Record, Then Dips

Tech stocks lifted the Nasdaq, with Broadcom up over 5% and Apple rising 2%. Nvidia reached an all-time intraday high but closed down 0.7%, though shares are still up 165% this year. Investors await May retail sales data for consumer health insights, with expectations of 0.2% growth. Additional economic reports on industrial production and business inventories are also anticipated, alongside speeches from several Federal Reserve officials.

Treasury Yields Rise, Oil Prices Up, Gold Edges Higher

U.S. Treasury yields increased as investors awaited May retail sales data, reflecting consumer health. Oil prices climbed due to a stronger demand outlook and confidence that OPEC+ might halt or reverse supply increases later this year. Gold prices edged higher as Treasury yields eased, with market participants looking for guidance from upcoming economic data and Federal Reserve remarks. Several Fed officials are set to speak, and U.S. markets will close Wednesday for the Juneteenth holiday.