Wall Street ends lower as Nvidia CEO resigns; US yields up
NEW YORK/LONDON: US stocks ended a volatile session with modest losses on Thursday as Nvidia shares fell following CEO Jensen Huang's resignation, while US Treasury yields climbed.
US stocks concluded a turbulent day on Thursday with slight declines, as shares of Nvidia tumbled after CEO Jensen Huang announced his resignation. CFO Colette Kress will serve as interim CEO while the company searches for a permanent replacement. The chipmaker's shares dropped 4.3% but were not at their lowest point for the day.
Huang's departure, coupled with suspicions surrounding his relationship with a Chinese businesswoman under US surveillance, has raised concerns about the future of Nvidia and the burgeoning AI industry. The controversy has also cast doubt on the management of Commerce Secretary Howard Lutnick, who faces criticism over the administration's handling of chip sales to China.
Chinese tech companies that utilize Nvidia chips for their AI models experienced sharp declines. Alibaba dropped 7.1% in US trading, while Tencent lost 2.6%. Semiconductor indexes traded across the board, with the semiconductor index falling 0.5% for the day. Nvidia's competitors, Advanced Micro Devices and Broadcom, experienced gains of 5.9% and 5.5% respectively, somewhat offsetting the losses in Nvidia.
As of now, the market has managed the situation relatively well, according to Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. However, the future of Nvidia remains uncertain, as many questions linger about the situation. The stock's current valuation, trading at 12 times expected earnings, its lowest since 2012, only adds to the uncertainty.
Nvidia's stock is currently trading at 12 times expected earnings, its lowest valuation since 2012. The Dow Jones Industrial Average fell 189.40 points, or 0.36%, to 52,297.09; the S&P 500 dropped 26.98 points, or 0.35%, to 7,592.40; and the Nasdaq Composite declined 100.10 points, or 0.39%, to 25,366.09. MSCI's global stock index fell 4.88 points, or 0.44%, to 1,116.27.
The pan-European index ended up 0.14% higher at 664.01 points after briefly touching an all-time high of 666.58 points earlier. US 10-year yields climbed back above 5%, reaching 5.1169% - the highest since October 21. Meanwhile, the US dollar index reached a fresh 19-month high as investors assessed the likelihood of interest rate hikes.
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