Nvidia slump headlines broader stock losses as inflation fears creep back


Stock market darling Nvidia headlined broader losses on Wall Street on Thursday as the age-old story of sticky inflation crept its way back to the forefront of investors’ minds.
Markets Open After Strong Performance On Thursday

Thursday was a rare blemish for Nvidia’s stock.

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Key Takeaways
  • The Dow Jones Industrial Average (down 0.4%), S&P 500 (down 0.3%) and tech-heavy Nasdaq (down 0.3%) stock indexes all slipped Thursday.
  • Equities’ slump came after another inflation report revealed sticky price increases—Thursday morning’s wholesale inflation report unexpectedly revealed the largest monthly jump in producer prices since August—throwing cold water on hopes about incoming interest rate cuts much yearned for by Wall Street.
  • Semiconductor chip giants Nvidia (shares down 3% Thursday) and Advanced Micro Devices (down 4%) were the second- and third-biggest losers of any American company worth more than $200 billion, only outflanked by Elon Musk’s battered electric vehicle maker Tesla, whose stock sank more than 4% to another 10-month low.
  • Nvidia’s and Advanced Micro Devices’ Thursday losses underscore a rare step back for the scorching-hot semiconductor sector as artificial intelligence-happy capital floods into the space.
  • The Philadelphia Stock Exchange’s Semiconductor index (SOX) fell 2% on Thursday to a two-week low, extending its one-week loss to 8% as the interest rate-sensitive sector grapples with expectations for higher-for-longer interest rates and some investors cash out their handsome profits following chip stocks’ explosion over the last year-and-a-half.
  • Nvidia shares are down more than 5% over the last week, wiping out about $120 billion in market value.

Nvidia remains by far the best-performing S&P constituent this year and over the last 12 months, returning 77% and 265%, respectively. The SOX has gained more than 50% over the last year and the S&P and Nasdaq are up more than 30% apiece during that stretch, as investors still have little grounds to complain about their recent returns.

Key Background

Bond markets also fell Thursday, as 10-year U.S. Treasury yields jumped 10 basis points to their highest level since last month. Higher bond yields indicate a loss in value of existing bonds as the open market demands a higher rate of return. Bitcoin tanked as well, with the world’s largest cryptocurrency sinking 6% in the 24-hour period ending at 4 p.m. ET, though bitcoin has gained a cool 58% in 2024. Higher inflation means the Fed is less likely to cut rates as it seeks to kill the country’s worst bout of inflation since the early 1980s.

What To Watch For

What the Federal Reserve says about rates at its meeting concluding next Wednesday. The Fed “will need to see more improvement in the upcoming inflation data to have enough confidence to begin to ease,” Bank of America economists Stephen Juneau and Michael Gapen explained in a Thursday note to clients.

This article was first published on forbes.com and all figures are in USD.

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