US stocks: S&P 500, Nasdaq close lower as Nvidia woes and rate-hike bets pressure US market

The S&P 500 and Nasdaq ended lower on Friday as Nvidia-related concerns weighed on technology stocks, while the latest inflation data did little to change expectations for further Federal Reserve rate hikes.

The S&P lost 31.53 points, or 0.42%, to end at 7,560.87 points, while the Nasdaq Composite lost 230.13 points, or 0.91%, to 25,135.96. The Dow Jones Industrial Average rose 46.14 points, or 0.09%, to 52,343.23.

Nvidia's shares fell and recorded their sixth straight week of declines, their longest streak since October 2012, after CEO Jensen Huang's resignation on Thursday. He stepped down after revelations of extramarital affairs, including a relationship with a businesswoman suspected by the US of spying for China. Nvidia’s board has approached Arm Holdings CEO Rene Haas as a potential successor to Huang, the Financial Times reported.


The leadership uncertainty has raised questions about the durability of the AI trade because of Nvidia’s central role in the industry’s expansion and its financial ties to several companies in the sector. AI stocks have been a main driver of the equity bull market.

Also Read: Fed officials signal further rate hikes as inflation remains elevated

“The tech trade, the AI trade, Nvidia is going to go through a period of volatility, and you’re going to see the bulls and bears kind of wrestle on where this narrative goes through the rest of the year ... there’s been a loss of confidence,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan, according to Reuters.

“The market and investors are trying to navigate what the AI theme looks like in the absence of Jensen Huang, who was basically the AI champion and willing to use Nvidia’s balance sheet to fund a lot of this AI expansion. That’s gone.”

Despite the recent volatility, all three major indexes were on track to post weekly gains. The S&P 500 and Nasdaq were set to end four-week losing streaks.

The Philadelphia Semiconductor Index fell 3.7%, with Advanced Micro Devices and Broadcom among the biggest drags.

AI cloud companies CoreWeave and Nebius also declined, while data-centre-related stocks IREN and Applied Digital traded lower.

The losses came ahead of Anthropic’s highly anticipated initial public offering next week, which could test demand for established AI companies as investors consider shifting money toward the new entrant.

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The S&P 500 technology index fell 1.6%, making it the worst-performing of the benchmark’s 11 major sectors. Microsoft edged 0.4% higher as a global outage affecting products including Outlook and Teams began to ease.

The Labor Department said US producer prices rose slightly less than expected in October but increased 6.5% from a year earlier, the largest annual gain since November 2022.

The data did little to change expectations for a Federal Reserve rate increase of at least 25 basis points in December. Markets were also pricing in a roughly 10% chance 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 inflation pressures intensify.

San Francisco Fed President Mary Daly said Friday that her “bias” was that the central bank would need to raise its policy rate. Boston Fed President Susan Collins also said tighter monetary policy was coming because inflation remained high.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)