Nvidia Leads Chip Rout as December Rate Hike Looms

By Marcus Bennett

The S&P 500 fell 0.4% to 7,561 on Friday as Nvidia lost 2%, the semiconductor index dropped 3.4%, and the Dow finished nearly unchanged at 52,347.

The Nasdaq Composite shed 0.9% to 25,136. Wall Street spent Friday dealing with Nvidia’s leadership crisis, rising rate expectations and a late nationwide U.S. takeoff ban.

The S&P 500 and Nasdaq ended four-week losing streaks with weekly gains of 2.5% and 2.3%, respectively. The Dow gained about 2% for the week.

Nvidia’s leadership shock reaches chip stocks

Nvidia shares fell another 2% on Friday. They have now declined for six consecutive weeks, the company’s longest losing run since October 2012.

Jensen Huang resigned the previous day after disclosures of extramarital affairs. One alleged relationship involved a woman whom the United States suspects of spying for China.

The Financial Times reported that Nvidia’s board contacted British chip developer Arm Holdings chief executive Rene Haas about becoming Huang’s successor.

The uncertainty over Nvidia’s leadership intensified concern about the durability of the AI expansion. Anthony Saglimbene, chief market strategist at Ameriprise Financial, said Nvidia had used its balance sheet to finance much of it. “That is now over,” he said.

Clear Democratic victories in the previous week’s midterm elections also fed concern that tighter government regulation could slow AI companies’ growth.

Advanced Micro Devices fell 8.8% and Broadcom lost 4.8%. Losses also spread to cloud and data-centre providers CoreWeave, Nebius and IREN.

The declines came ahead of the anticipated Anthropic initial public offering in the following week.

Microsoft moved against the trend, closing 0.2% higher. It recovered early losses after a worldwide disruption affecting Outlook and Teams was fixed.

Airlines absorb the FAA grounding

Airline shares weakened in the final trading minutes after the Federal Aviation Administration imposed a nationwide takeoff ban.

The agency cited extraordinary circumstances and safety concerns after reports of serious problems with air-traffic-control communications. The airline industry index closed 1.4% lower.

Inflation keeps December rate hike in view

U.S. producer prices for October came in somewhat weaker than expected. They nevertheless rose 6.5% from a year earlier, the strongest annual increase since November 2022.

The report reinforced expectations for a Federal Reserve rate increase in December.

CME FedWatch data showed markets fully pricing at least 25 basis points, while the probability of a 50-basis-point increase stood at about 10%.

Several Fed officials on Friday indicated willingness to support further rate increases. San Francisco Fed President Mary Daly said: “I expect the central bank will need to raise the benchmark rate.”

Boston Fed President Susan Collins said high inflation meant tighter monetary policy was ahead.

What does this change for markets?

For investors, the session put three near-term issues in focus: succession at Nvidia, the durability of the AI expansion and the December Fed decision.

Semiconductor and cloud names carry the direct exposure to leadership and regulatory concerns, while airlines face a separate safety-driven shock. Rate-sensitive equities face a December increase of at least 25 basis points priced by markets.

Friday’s losses did not erase the weekly gains, but they left investors with a sharper view of near-term risks around Nvidia and AI regulation.

The week ahead brings the Anthropic IPO, continued Nvidia succession uncertainty and a December rate decision that markets already treat as likely.