Wednesday’s big stock stories: What’s likely to move the market in the next trading session

The Trump administration is reportedly nearing an executive order to expand private market investments within 401(k) plans, driving after-hours gains for alternative asset managers like Apollo and KKR. Concurrently, Nvidia's sustained rally propelled the tech sector to new highs, while U.S.-listed Chinese tech stocks also surged following positive economic data. Amidst this, Japan's 10-year and 30-year bond yields reached multi-year and record highs, respectively, on concerns over government spending.

Analysis

The market is exhibiting a distinct divergence, with specific catalysts driving performance in key sectors. A potential U.S. executive order to allow private market investments in 401(k) plans has created a positive tailwind for alternative asset managers, evidenced by after-hours gains of 2% for both Apollo (APO) and KKR. While these stocks remain 23% and 20% off their respective recent highs, they have posted strong monthly gains of 10% and 13%. Concurrently, the technology sector, the sole S&P 500 gainer on the day (+1.27%), was propelled to a new high almost single-handedly by Nvidia (NVDA), which rose 4% to a record close after signaling a potential resumption of H20 AI chip sales to China. This has extended NVDA's three-month gain to 52%. However, performance within the semiconductor space is bifurcated; while ON Semi and Synopsys are up over 11% in July, Marvell and Qualcomm have declined 6.5% and 3% respectively. Separately, positive economic data from China fueled a significant rally in U.S.-listed Chinese equities, with Alibaba (BABA) and Baidu (BIDU) jumping over 8%, though they remain 21% and 20% below their recent peaks. On the macroeconomic front, a notable risk signal is emerging from Japan, where government spending concerns have pushed the 10-year bond yield to its highest since 2008 (1.59%) and the 30-year yield to a record high (3.21%), contributing to a 5% drop in the iShares MSCI Japan ETF (EWJ) from its June high.

Key Decisions for Investors

• Consider overweighting positions in alternative asset managers like Apollo (APO) and KKR, as the potential regulatory change for 401(k) plans represents a significant, long-term catalyst for capital inflows and fee-related earnings.
• Maintain a selective approach within the technology sector; while momentum in leaders like Nvidia (NVDA) remains strong, the underperformance of peers like Marvell (MRVL) suggests a need for careful stock selection rather than broad ETF exposure.
• For tactical, risk-tolerant investors, the sharp rebound in Chinese internet stocks such as Alibaba (BABA) may offer a trading opportunity, but be mindful that these assets remain significantly below prior highs, indicating persistent underlying volatility.
• Monitor rising Japanese government bond yields and the weakness in the iShares MSCI Japan ETF (EWJ) as a potential leading indicator of global risk aversion stemming from sovereign debt concerns.