Nasdaq Drops Friday But Ends the Week Up: Stock Market Today
Stocks opened higher Friday after mixed inflation data, but turned lower on continued weakness in tech stocks. Still, the three main benchmarks closed with impressive weekly gains. Looking ahead, there’s plenty on next week’s docket to keep markets volatile, including Nvidia‘s (NVDA) first earnings report without Jensen Huang at the helm and the highly anticipated Anthropic IPO.
At the close, the tech-heavy Nasdaq Composite was down 0.9% at 25,136 and the broader S&P 500 was off 0.4% at 7,561. The blue-chip Dow Jones Industrial Average finished up 0.1% at 52,347.
Ahead of the open, the Bureau of Labor Statistics (BLS) said the Producer Price Index (PPI), which measures wholesale prices, rose 0.3% from September to October — lower than economists’ 0.4% forecast. But PPI was up 6.5% year over year, the highest annual rate since November 2022.
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Core PPI, which excludes volatile food and energy costs, rose 0.3% month over month, in line with expectations. However, core PPI’s annual rate of 5% was the highest since January 2023.
“The good news is that producer price inflation cooled from September,” says Chris Osmond, chief investment officer for Fifth Third Wealth Advisors. “The bad news is that it may not have cooled enough to give markets the rate relief they want.”
Indeed, rate-hike odds rose after this morning’s PPI. According to CME Group FedWatch, futures traders are now pricing in a 90% probability the Federal Reserve will raise interest rates by a quarter-percentage point at its December meeting, up from 85% one day ago.
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Osmond warns that what is “perhaps more important than the headline number is the broadening of inflation beyond energy.” Energy prices were actually lower in October, he says, but prices for food, services and transportation/warehousing were up. “That suggests inflation is working its way into the broader economy rather than remaining concentrated in the original areas of price pressure.”
And if this continues, he explains, it will be difficult for the Federal Reserve to argue that higher inflation is temporary.
Nvidia closes out dramatic week with a loss, earnings on tap
In single-stock news, Nvidia shares continued to slide, shedding 2% Friday, after Jensen Huang’s shocking resignation as CEO and board member.
Huang stepped down Thursday morning after it was revealed he had an extramarital affair with a direct report. The board had already launched an investigation into his relationship with an executive at a Singapore-based cloud company whom U.S. officials have classified as a Chinese spy.
The artificial intelligence (AI) chipmaker will remain in the spotlight next week with its earnings report scheduled for release after Tuesday’s close. Nvidia’s quarterly results are always a marquee event on the earnings calendar — and the event has become an even bigger deal following Huang’s departure.
“The AI Revolution has never been about one person,” says Cullen Rogers, CIO at Wedbush Fund Advisers and portfolio manager of the Dan IVES Wedbush AI Revolution ETF (IVES). The company now has to prove that “it can execute without its founder, and the November 17 call is the first read on that. That’s a Nvidia question, not an AI question.”
We’ll see what Chief Financial Officer and now interim CEO Colette Kress has to say about Nvidia’s latest quarterly numbers during the earnings call. Kiplinger will be reporting on all the latest news and updates, so be sure to check back.
Cisco sinks after earnings
Friday’s tech slump was broad-based, with several stocks selling off into the weekend.
“Tech is getting slammed as Nvidia’s shakeup intensifies in response to mounting evidence that the firm’s chips are reaching the wrong hands in China,” says José Torres, senior economist at Interactive Brokers. “The entire semiconductor space is taking a beating on this Friday the 13th, with investors concerned that tighter regulations and heavier oversight may ding revenue and income prospects.”
Advanced Micro Devices (AMD) fell 8.8%, making it the worst S&P 500 stock today, while Broadcom (AVGO) shed 4.8% and Intel (INTC) dropped 2.5%.
Elsewhere in the tech space, Cisco Systems (CSCO) plunged 6.2%, despite the networking equipment and infrastructure firm’s beat-and-raise quarter. Cisco has been one of the best Dow Jones stocks so far this year, so Friday’s decline could represent profit-taking.
“The October quarter eased some of our concerns around pull-forward, and the earnings-per-share raise was larger as opex efficiency grew,” says Morgan Stanley analyst Meta Marshall. And while the analyst remains “constructive on the multiyear growth outlook,” she has an Equal-Weight (Hold) rating on the blue chip stock as Cisco’s recent rally leaves “less room for upside.”
The Anthropic IPO is finally here
Next week also brings the Anthropic IPO, with the AI giant expected to price its initial public offering Wednesday evening and begin trading on the Nasdaq under the ticker symbol “ANT” on Thursday.
The company provided an initial range earlier this week, saying it will sell 825 million shares at $70 to $78 apiece. Bloomberg has reported that the offering is roughly six times oversubscribed, meaning retail investors have placed orders for six times the number of shares available. This massive demand gives the company leverage over its share pricing and could create volatility for ANT stock when it first begins trading.
