AI values under pressure: Nvidia turbulence is weighing on Wall Street

The expulsion of Nvidia boss Huang shakes the technology sector. The share price continues to slide, a few direct competitors are benefiting, but overall traders are currently more skeptical about the topic of AI.

After the resignation of Nvidia boss Jensen Huang, Wall Street slipped into the red. The Dow Jones index of standard stocks closed 0.36 percent lower at 52,297 points. The broader S&P 500 fell 0.35 percent to 7,592 points. The Nasdaq technology exchange index lost 0.39 percent to 25,366 points. Price gains in the energy sector could not offset the losses in technology stocks.

Nvidia shares closed 4.3 percent lower at around $166. In early trading they had fallen to just under $149, but were then able to recover a bit. At the beginning of October the papers cost just under $240. The chip company named CFO Colette Kress as interim chief executive after Huang resigned amid allegations of extramarital affairs. US authorities are currently investigating one of the women to determine whether she could be a Chinese spy.

Shares of Nvidia competitors such as Broadcom, Advanced Micro Devices and Alphabet posted price gains and supported the S&P 500. However, stocks related to artificial intelligence (AI) fell worldwide. The shares of the AI ​​cloud company Nebius collapsed by 16.8 percent after the presentation of quarterly figures.

The stock markets have been volatile in the past few days. The clear victories of the Democrats in the US midterm elections have fueled expectations that AI could be more closely regulated in the future. The turbulence at the top of Nvidia is putting the industry, one of the pillars of the current bull market, under further pressure.

“Right now the market is selling AI and technology stocks and buying safe assets,” said Jed Ellerbroek, portfolio manager at Argent Capital Management. However, he expects this trend to reverse again. Investors expect Nvidia's financing practices to come under greater scrutiny following Huang's departure. The company has provided financial support to several companies, including its own customers.

Energy values asked

The S&P 500 energy index rose 1.5 percent, posting its fourth consecutive day of gains. After US President Donald Trump declared that the US did not need an agreement with Iran, crude oil prices rose again.

With regard to monetary policy, investors are waiting for the publication of producer prices on Friday. Markets are pricing in a Fed rate hike of at least 25 basis points in December, according to data from CME FedWatch. Cleveland Fed President Beth Hammack said Thursday that the central bank does not need to move toward more aggressive interest rate moves to combat inflation. Her colleague from San Francisco, Mary Daly, said the Fed would likely have to raise interest rates further.