Dow Jumps 1,104 Points as Chip Stocks Rebound Despite Nvidia Slide
The S&P 500 had its best day since April on Nov. 9 as chipmakers rallied and oil fell, even as Nvidia lost about 4% over a board probe of its CEO.
U.S. stocks staged a broad rebound on Monday, Nov. 9, with the Dow Jones Industrial Average gaining 1,104.02 points, or 2.15%, to close at 52,389.75. Semiconductor shares recovered much of last week’s losses and oil prices kept falling. The rally came even as Nvidia, the world’s most valuable chipmaker, lost about 4% after its board opened an investigation into Chief Executive Jensen Huang.
The S&P 500 rose 2.35% to 7,549.94, its best session since April 8, CNBC reported. The Nasdaq Composite advanced 2.74% to 25,253.14, and the small-company Russell 2000 index climbed 3.15%, according to Yahoo Finance market data. The Cboe Volatility Index, known as the VIX and often called Wall Street’s fear gauge, fell about 22% to 19.92.
What happened
The gains were broad. CNBC reported that industrials led the S&P 500’s 11 sectors with a 4.2% rise, while consumer discretionary stocks gained 3.7% and information technology 3%. Energy was the weak spot as crude prices slid. Advancing stocks beat decliners by roughly four to one on the New York Stock Exchange, Investing.com data showed.
Chipmakers drove much of the rebound. The iShares Semiconductor ETF, a fund that tracks U.S.-listed chip stocks, rose more than 7% after falling about 13% last week, according to CNBC. Advanced Micro Devices jumped about 13% after Oppenheimer upgraded the stock to outperform with a $600 price target. Monolithic Power Systems surged more than 16%, and Broadcom gained nearly 9%. Within the Dow, Caterpillar rose 7.2%, Cisco 5.1% and Goldman Sachs 4.7%, Investing.com reported.
Among other large technology companies, Tesla rose about 5.5%, while Amazon and Microsoft each gained close to 3%, CNBC said.
Nvidia bucks the trend
Nvidia was the Dow’s worst performer. Its shares closed down about 4% at roughly $179, after falling as much as 8% early in the session, Yahoo Finance reported. The company’s board opened an independent investigation into Huang after he acknowledged an extramarital affair in a memo to staff. CNBC reported that U.S. intelligence agencies say the businesswoman involved is a Chinese spy. Yahoo Finance described the claim as a belief held by U.S. officials and said it had not been confirmed. An Nvidia spokesperson said Huang remains committed to staying on as CEO, according to CNBC.
Dan Ives, an analyst at Yorkville Ives & Co., called the episode “a black eye moment for Jensen,” CNBC reported. Analysts quoted by Yahoo Finance pointed to key-person risk. Nvidia makes up about 7% of the S&P 500 and has no named successor to Huang. Still, the selling stayed largely confined to Nvidia, and other chip stocks rallied.
Why it matters
Monday’s rally reversed part of a volatile week after the Nov. 3 midterm elections, in which Democrats won control of Congress. Investors sold artificial intelligence and chip stocks last week, and the Nasdaq slipped into correction territory, usually defined as a drop of at least 10% from a recent high. CNBC tied that selling partly to worries that Democratic gains could bring tighter rules on data center construction and energy use. By Monday’s close the Dow was back above its Election Day level, while the S&P 500 and Nasdaq remained slightly below theirs, CNBC said.
Falling energy prices also helped. U.S. crude settled down 4.38% at $86.85 a barrel and Brent, the global benchmark, dropped 5.85% to $92.57, CNBC reported, after President Donald Trump said renewed U.S. strikes on Iran were unlikely while talks progress. Gold futures rose almost 2%, according to Investing.com.
Not everyone thinks the worst is over for tech. CNBC reported that Citi downgraded U.S. technology stocks to neutral from overweight, citing investor positioning and sentiment. Jay Hatfield of Infrastructure Capital Advisors called the chip selloff “overdone” but expects the S&P 500 to trade in a range through year-end. Nicholas Colas, co-founder of research firm DataTrek, said the recent swings are “AI-centric, not augurs of a looming recession,” according to Yahoo Finance.
What comes next
Inflation data could test the rebound. Key events this week include:
- Tuesday: The October consumer price index. Economists expect a 0.3% monthly rise, down from 0.6% in September, with core prices up 0.2%, Yahoo Finance reported.
- Friday: The producer price index, which tracks wholesale prices.
- Earnings: Results from AI cloud provider CoreWeave, network equipment maker Cisco and chip-equipment supplier Applied Materials.
Investors will be watching the data for signals about the Federal Reserve’s December policy meeting. After a strong October jobs report, some economists now see a possible rate increase. Chris Senyek of Wolfe Research told CNBC that markets are “likely to remain very news flow driven.”
