Nvidia rout drags Nasdaq down 2% as chip selloff overshadows inflation data
A fresh selloff in chipmakers knocked US stocks lower, with a closely watched gauge of semiconductor heavyweights sinking 6% and the Nasdaq 100 losing 2% as of 10.38am New York time. The S&P 500 fell 1%. The drop overshadowed inflation data that eased concern about aggressive Federal Reserve rate hikes.
Nvidia Corp was again at the centre of the turmoil, hit by uncertainty following the abrupt exit of Jensen Huang, its sole chief executive in more than three decades. The leadership shake-up rippled through the tech sector this week, whipsawing industry giants. Dip buyers held back, a sign of anxiety around the artificial-intelligence trade ahead of the chipmaker's earnings next week.
"The next real test arrives when Nvidia reports on Nov 17, and the thing to watch is not who is at the podium but whether the order book has changed," said Brian Jacobsen at Annex Wealth Management. Interim chief executive Colette Kress, Nvidia's veteran finance chief, will use the earnings call to try to assuage investor fears. Beyond Huang's resignation, Nvidia faces heightened regulatory and legal scrutiny, with probes into whether US export restrictions were circumvented in sales to Chinese companies.
On the economic front, the producer price index climbed in October from a year earlier at the fastest pace since 2022, though the data came slightly below estimates. The PPI components that feed into the Fed's preferred price gauge were weaker in October, according to Vail Hartman at BMO Capital Markets. "While some committee members may advocate more aggressive action, we should expect a 25-basis-point rate hike," said Jeffrey Roach at LPL Financial. "Given the fragility of the broader economy, a larger 50-basis-point increase could pose unnecessary risks."
Before the report, New York Fed president John Williams said inflation remains high and policymakers must take further action. Boston Fed president Susan Collins signalled tighter policy may be needed, and Chicago's Austan Goolsbee told CNBC the central bank must do more. Short-dated Treasuries outperformed, with the two-year yield down five basis points to 4.83%, while the 10-year was little changed at 5.13%. Bitcoin fell 4.6% to US$68,192.16 and Ether dropped 5% to US$1,915.34.
What it means for Pakistan: The chip rout and Nvidia's leadership turmoil feed straight into the global risk appetite that shapes how Pakistani investors treat crypto and tech exposure, with bitcoin's 4.6% slide to US$68,192.16 a reminder that swings on Wall Street travel fast to local trading screens. Any further tightening signalled by Fed officials would harden the dollar and add pressure on the rupee, while the scrutiny of AI-chip exports to China is a caution for Pakistani firms seeking US hardware or partnerships in the sector.
