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The chip company’s shares fell but were well off the day’s lowest level after earlier dropping nearly 12%. Retail investors bought Nvidia shares worth about $111 million in the first half hour of trading, the biggest opening bid on record for the stock, according to data from Vanda Analytics.
The S&P 500 lost 25.99 points, or 0.34%, to end at 7,593.39 points, while the Nasdaq Composite lost 102.44 points, or 0.40%, to 25,363.75. The Dow Jones Industrial Average fell 190.29 points, or 0.36%, to 52,296.20. The S&P 500 energy index gained about 2%, making it the best performer among the benchmark’s 11 major sectors. Crude prices rose after President Donald Trump wrote on social media that the US did not need a deal with Iran.
AI-linked stocks fell globally after Nvidia named Chief Financial Officer Colette Kress as interim CEO. AI cloud company Nebius tumbled nearly 18% following its quarterly results and outlook.
However, Nvidia rivals and other major technology companies, including Broadcom, Advanced Micro Devices, Alphabet and Amazon, advanced and provided the biggest support to the S&P 500.
Stocks have been volatile in recent days as sweeping Democratic victories in the US midterm elections fueled concerns about tighter AI regulation. Uncertainty surrounding Nvidia’s leadership has also pressured one of the main drivers of the current bull market.
Also Read | US stocks: Nvidia shares plunge 13% after Jensen Huang quits as CEO; Colette Kress named interim chief“Right now, the market is selling AI stocks and tech stocks and buying safe stuff, just like it did in the first halo trade in January and February of this year, but it will flip back,” said Jed Ellerbroek, portfolio manager at Argent Capital Management in St. Louis.
“That’s the tug of war the market is doing right now. It’s concerns about deceleration versus just pointing out that the absolute valuation and growth rates are still pretty compelling.”
Nvidia’s financing ties face scrutiny
Huang’s departure is expected to intensify scrutiny of AI companies with close financial ties to Nvidia.
The chipmaker has backed several businesses, including some of its customers, through financing arrangements that investors are reassessing following the leadership change.
Also Read | Jensen Huang’s Nvidia exit raises fears over the future of AI financing
“Nvidia is the circular-funder-in-chief; they’re the biggest by far at this point, and I assume that activity will moderate,” Ellerbroek said.
The Philadelphia Semiconductor Index fell 0.5% after gaining 17.2% over the previous four sessions. CoreWeave dropped about 7%, while shares of data-center companies IREN and Applied Digital also declined.
Investors await inflation data
Investors are looking to Friday’s Producer Price Index for further indications about inflation after consumer prices rose more than expected earlier in the week.
Markets are fully pricing in a Federal Reserve rate increase of at least 25 basis points in December, with a 15% probability of a larger 50-basis-point move, according to the CME FedWatch tool.
Comments from several Fed officials this week suggested the central bank could consider a more aggressive path of rate increases as price pressures intensify.
Cleveland Fed President Beth Hammack said Thursday that she did not believe the central bank needed to shift to larger rate increases to control inflation. San Francisco Fed President Mary Daly said rates would probably need to rise further to address elevated inflation but did not indicate any urgency.
(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)
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