Stocks opened lower on Thursday after news that Nvidia CEO Jensen Huang resigned. Major US indexes recovered by late morning, demonstrating how quickly traders can shift capital between sectors.
Nvidia fell as much as 14% early in the trading session before cutting losses to around 4.5% to 5.7% by midday. The chipmaker occupies a central position in the AI investment boom that has driven market performance this year.
Market Recovery and Sector Rotation
The Dow Jones Industrial Average rose approximately 250 points, or 0.5%, at its peak, while the S&P 500 gained as much as 0.4% and the Nasdaq Composite climbed 0.5%. Gains moderated by midday, with the Dow up 0.4%, the S&P 500 up 0.1%, and the Nasdaq near flat.
Traders initially moved cash out of Nvidia and into other AI stocks, with buying momentum subsequently spreading to the broader market. A majority of S&P 500 stocks traded higher during the session.
Chip stocks showed mixed performance. Intel fell approximately 1.7%, Micron declined, while AMD rose. The Invesco S&P 500 Equal Weight ETF returned to breakeven and continued gaining.
Broader Market Pressures
The Nvidia news adds to recent concerns about the AI trade and arrives days before Anthropic's planned public debut. Reports indicated Huang faced questions about personal matters.
Separate developments also weighed on markets. Tuesday's inflation report came in hotter than expected, prompting Wall Street analysts to raise forecasts for larger and more frequent Federal Reserve rate hikes. A more restrictive central bank stance is viewed negatively for US borrowers and riskier assets, including cryptocurrencies.
Index provider MSCI is removing Strategy from its US indices. Oil prices reversed earlier declines, with Brent crude futures rising to $93 per barrel following comments that raised concerns about US-Iran tensions continuing.
As of 12:26 PM EST Thursday, the Dow stood at 52,693, up 206 points or 0.39%, the S&P 500 near 7,628, and the Nasdaq near 25,456.
