Stocks Slip as Wall Street Weighs Nvidia's CEO Crisis: Stock Market Today
The Nasdaq tumbled sharply at Thursday's open on news that Jensen Huang resigned as Nvidia CEO, but quickly stabilized.
Stocks were hit with a shock early Thursday when Jensen Huang resigned as Nvidia (NVDA) CEO and board member. This came after it was revealed he had a second affair, this time with a direct report. The board had already launched an investigation into his relationship with an executive at a Singapore-based cloud company whom U.S. officials have classified as a Chinese spy. But markets quickly recovered and finished the day well off their intraday lows.
The tech-heavy Nasdaq Composite fell more than 1% out of the gate but finished the day down a more modest 0.4% at 25,366. The broader S&P 500 closed 0.4% lower at 7,592 and the blue-chip Dow Jones Industrial Average shed 0.4% to 52,297.
Nvidia, which has an outsize weighting in the Nasdaq and S&P 500 given its nearly $4 trillion market cap, plunged nearly 14% this morning in reaction to Huang's resignation. But cooler heads prevailed, and shares ended the day down 4.3%. That's not even a large enough drop to crack Nvidia's 10 biggest one-day percentage losses in the past two years.
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Where does Nvidia stock go from here? "In the near term, investors should expect significant volatility in Nvidia," writes Ken Mahoney, president and CEO of Mahoney Asset Management. "Longer term, we believe this could ultimately present an opportunity for investors with the appropriate time horizon. Nvidia remains a vitally important company with tremendous earnings power and a central role in the AI revolution."
And the tapping of Colette Kress to serve as interim CEO was the "sensible thing" for the company to do, says Mark Malek, chief investment officer at Siebert Financial. Kress has served as Nvidia's chief financial officer for 13 years. She "knows every number in that order book," adds Malek.
We'll see what Kress has to say about Nvidia's latest quarterly numbers when the chipmaker discloses earnings after next Tuesday's close. Kiplinger will be reporting on all the latest news and updates, so be sure to check back.
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The winners and losers in the Nvidia shock
Huang's abrupt resignation sent ripples across Wall Street, with several tech stocks closing lower in reaction to the news. Micron Technology (MU), for one, which sells memory chips to Nvidia, shed 1.6% on worries that any slowdown in NVDA's operations could weigh on its sales.
And neocloud CoreWeave (CRWV), in which Nvidia holds a major stake, slumped 6.9%.
But fellow AI chipmakers Advanced Micro Devices (AMD, +5.9%) and Broadcom (AVGO, +5.5%) both jumped on expectations that Nvidia's loss is their gain.
The "risk/reward has shifted in AMD's favor," says William Blair analyst Sebastien Naji, who upgraded the AI stock this morning to Outperform (Buy) from Market Perform (Hold). "We see a runway for shares to work from here, with Instinct share gains offering additional upside as AMD stays focused on execution while its largest competitor, Nvidia, contends with a growing leadership and regulatory imbroglio."
Home sales sink to a 16-year low in October
In non-Nvidia news, the National Association of Realtors (NAR) said existing home sales fell 5.5% from September to October to a seasonally adjusted annual rate of 3.75 million — their lowest levels since August 2010.
"Home buying is difficult when mortgage rates have climbed to their highest levels since 2000, aside from a single month in 2023," says National Association of Realtors Chief Economist Lawrence Yun. But if mortgage rates decline, Yun believes we could see "sizable pent-up demand" given "the current underwhelming home sales pace" and "consistent job growth."
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