Wall Street faced a major test last week as Nvidia's stunning leadership shake-up dominated the headlines and brought more uncertainty to the AI trade. Despite the turbulence, the S & P 500 secured a weekly gain of 2.5%, while the tech-heavy Nasdaq added 2.3%. Both indexes were up so much on Monday and Wednesday that declines on Tuesday, Thursday, and Friday were no match. In fact, both the S & P 500 and Nasdaq have made sizeable dents in the losses they suffered in the postelection market rout on Nov. 5. While Nvidia shares fell another 2% on Friday, the market ended the week under pressure for a different reason. It was the potential for multiple Federal Reserve rate hikes over the next few meetings that led to the selling. Before Friday's open, the October producer price index turned in its highest yearly reading in nearly four years. Headline PPI, a measure of wholesale inflation, was cooler than expected month over month. However, its year-over-year increase to 6.5% was all anyone cared about, especially after Tuesday's hot consumer inflation report…
Nvidia's leadership crisis rattles the AI trade. Here's how we're adjusting our portfolio
In short
Nvidia suffered a steep decline of nearly 13% last week after Huang departed amid allegations involving employee affairs and suspected espionage ties. Meanwhile, hotter-than-expected October wholesale inflation sparked concerns that the Federal Reserve may resume aggressive interest rate hikes. To navigate these sector headwinds, asset managers are fully divesting from Intel at a loss to reallocate capital into Advanced Micro Devices. The restructuring also includes capturing gains from data center suppliers and pivoting toward consumer defensive stocks.
Key points
- Rising wholesale prices have renewed market fears that the Federal Reserve will implement…: Rising wholesale prices have renewed market fears that the Federal Reserve will implement multiple interest rate increases.
- Capital from technology divestments is moving toward Advanced Micro Devices to target pot…: Capital from technology divestments is moving toward Advanced Micro Devices to target potential GPU market-share gains from Nvidia.
- Investors trimmed Eaton to capture a 47% gain while opening a defensive position in bever…: Investors trimmed Eaton to capture a 47% gain while opening a defensive position in beverage maker Constellation Brands.