The S&P 500 slid to 7,510.00, down 1.09% from Thursday’s close, as a rout in chip stocks weighed on the market. The Nasdaq Composite fell 1.85% to 24,897.76, while the Dow Jones Industrial Average held up relatively well, down 0.27% at 52,156.20.
A gauge of the largest chipmakers dropped 4% by mid-morning, with Nvidia down 4.67%, Advanced Micro Devices down 9.72%, and Broadcom down 6.77%. These losses were enough to drag the S&P 500 lower, even as most of its members were trading higher.
Chip Stocks Lead the Decline
The reversal from the open was violent, with the Dow printing 52,403.96 at 9:38 a.m., up 106.87 points, and the S&P 500 opening 0.35% higher after a softer-than-expected monthly wholesale inflation print. However, the gains were short-lived, and the S&P 500 swung more than 140 basis points to a late-morning low.
The weekly ledger still favors the bulls on paper. Through Thursday the S&P 500 was up 3.25% for the week and the Nasdaq Composite was up 4.32%, gains built almost entirely on Monday’s 2.35% and 2.74% surges. At current levels the S&P 500 holds a weekly gain just above 2% and the Nasdaq a gain just under 2.4%. Three consecutive sessions of chip selling have now consumed half of what Monday built, and the market goes into next Tuesday’s Nvidia report with the leadership group visibly broken.
The October Producer Price Index rose 0.3% month over month, below the 0.4% forecast, but the annual numbers told a different story. Producer prices rose 6.5% from a year earlier, up from 6.3% in September, and core producer prices rose 5.0% year over year.
Economic Data Weighs on the Market
Chicago Fed President Austan Goolsbee said the central bank still has work to do to rebuild credibility on inflation, that “lately we’re not making any progress,” and that inflation is moving the wrong way.
Nvidia traded down 4.67% late Friday morning, pricing the stock at $158.43 against Thursday’s close of $166.19. The company is facing a leadership vacuum after Jensen Huang resigned as chief executive, and the stock’s valuation is under pressure, trading at 12 to 13 times forward earnings, its lowest multiple since 2012.
Applied Materials delivered a record $10.41 billion quarter, but the stock traded down 6.23% Friday morning, pushed by the semiconductor sector rather than the fundamentals.
Modine jumped 38.37% from its $106.10 close on reports Samsung is in talks to buy the cooling maker.
