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Nvidia Fallout Shakes Wall Street
13 Nov
Summary
- Nvidia shares fell sharply after CEO resignation, impacting related companies.
- Wall Street indices closed lower due to Nvidia's drop and potential Fed rate hikes.
- Crude oil prices rebounded, further contributing to market declines.
Benchmark indices on Wall Street experienced a decline on Thursday, November 12, as the market reacted to significant news surrounding Nvidia. The company's shares initially opened 14% lower following the announcement of CEO and Co-founder Jensen Huang's resignation, although they later recovered some losses to close down 4.5%.
This downturn had a ripple effect on companies where Nvidia holds stakes, notably neoclouds such as CoreWeave and Nebius Group, which saw substantial drops in their stock values. Despite these impacts, competitors like AMD and Broadcom saw their shares rise, and Alphabet's stock ended higher, partially offsetting Nasdaq's losses.
The market's decline was exacerbated by external factors beyond the Nvidia-specific issue. Crude oil prices experienced a rebound, pushing Brent towards $96 a barrel, partly influenced by geopolitical commentary. Additionally, speeches from multiple US Federal Reserve officials signaled a potential for more aggressive interest rate hikes to combat inflation.
Fed fund futures are now factoring in a 25 basis points rate hike in each of the upcoming December, January, and March meetings. This hawkish outlook from Fed officials led to a surge in the US 10-year bond yield to 5.13% and an increase in the US Dollar index. Investors are now awaiting the US Producer Price Inflation (PPI) figures for further clues on future Fed policy.
