Stocks took a breather Tuesday following Monday’s big rally. Market participants kept a close eye on the United Nations General Assembly, hopeful for signs of a peace deal between the U.S. and Iran, even after President Donald Trump, in his address to the U.N. earlier, threatened to “annihilate the Islamic Republic.”
At the close, the blue-chip Dow Jones Industrial Average was down 0.4% at 51,863 and the broader S&P 500 was fractionally lower at 7,764. However, the tech-heavy Nasdaq Composite was up 0.5% at 27,244 — a new record closing high — as several artificial intelligence (AI) stocks continued to climb.
“The simple arithmetic at the moment is that the markets are being driven by one big tailwind and two big headwinds,” says Kyle Rodda, senior financial market analyst at Capital.com.
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Market sentiment is being supported by strong corporate fundamentals — particularly “extraordinary profits” from tech companies, Rodda explains, but there’s “uncertainty stemming from geopolitical risks and higher oil prices, and inflation and interest rate uncertainty — with the former partially contributing to the latter.”
Front-month West Texas Intermediate crude futures fell for a fifth straight day Tuesday after Saudi Arabia said it is close to reopening a critical oil pipeline after it was damaged in a drone attack. Still, oil prices remain nearly 11% higher for the month to date.
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President Trump is also scheduled to meet with Chinese President Xi Jinping in Washington, D.C., this week.
Wall Street is “looking for news on any agreements that may reduce tariffs or improve access to critical minerals,” says Jay Woods, chief market strategist at Freedom Capital Markets. “Any positive developments on that front could lift equities, particularly those in technology, industrial and consumer stocks. The flipside is that a breakdown in talks could revive trade-war concerns and market volatility.”
Sandisk soars on new Buy rating
In single-stock news, Sandisk (SNDK) jumped 6.8% after Rosenblatt Securities analyst Kevin Cassidy initiated coverage on the flash storage specialist with a Buy rating and $2,400 price target. This represents implied upside of 27% for a stock that’s already up 700% for the year to date.
“New AI compute platforms are creating an opportunity to reposition NAND flash from a commodity storage medium to a more system-critical component of AI infrastructure,” the analyst says.
And a shortage of memory chips has Wall Street expecting average selling prices to ramp up in the near term. This, says Cassidy, puts Sandisk in a strong position to capitalize on the opportunity.
Wall Street is overwhelmingly bullish toward the tech stock. Of the 25 analysts covering SNDK who are tracked by S&P Global Market Intelligence, 21 say it’s a Buy or Strong Buy, three have it at Hold and one rates it a Sell. This works out to a high-conviction consensus Buy recommendation.
Will Berkshire buy Lennar?
Over in the consumer discretionary sector, Lennar (LEN) popped 6.4% after a regulatory filing (PDF) revealed Berkshire Hathaway (BRK.B, +0.3%) bought another 2.6 million Class A shares late last week, bringing its stake in the homebuilder to 23.7 million shares. Berkshire also owns more than 500,000 Class B shares.
Berkshire now owns a little over 10% of Lennar, leading some to speculate if Warren Buffett‘s holding company is preparing to acquire the homebuilder. Berkshire currently owns homebuilders Taylor Morrison and Clayton Homes.
It’s a tough environment for homebuilders right now as high mortgage rates — the 30-year rate recently hit a 14-month peak above 7% — weigh on sales. In July, for instance, new home sales were down 10.5% from June. And existing home sales were 2% lower from July to August.
In June, Berkshire CEO Greg Abel said the holding company maintains “a long-term belief in the strength of America’s housing market and its underlying fundamentals, which we see as enduring over time.”
Shares of LEN were down 23% for the year to date through Monday’s close.