I'm Colette Auclair and here is Schwab's early look at the markets for Friday, November 13.
The weekend approaches with investors still digesting Jensen Huang's resignation as Nvidia's CEO yesterday. Huang's sudden downfall followed a New York Times report that he'd engaged in an extramarital affair with an executive at his company. He'd already admitted an affair with a woman alleged to be a Chinese spy.
Investors will also be on the lookout for today's 8:30 a.m. October Producer Price Index (PPI), after a hot Consumer Price Index (CPI) earlier this week sent yields to one-month highs.
Huang's departure left one of the largest chip names in the world looking rudderless, with no obvious successor.
"While Nvidia still has a great product, and the stock's valuation is cheap, there is a lot of uncertainty around future leadership and whether there is any disruption to customer relationships," said Nathan Peterson, director of derivatives research and strategy at the Schwab Center for Financial Research (SCFR).
Nvidia said Chief Financial Officer Colette Kress will serve as interim CEO and remain CFO while the board searches for Huang's replacement. At least on Thursday, that seemed to calm the market somewhat.
Broader markets held up relatively well, given the volatility and decline in Nvidia shares. For the week, S&P advancers were outpacing decliners by a four-to-one margin as of midday Thursday. The market's somewhat muted reaction could reflect that leadership was already broadening prior to the scandal. In fact, Nvidia isn't even in the top 10 of this year's S&P 500 return contributors, even though it is second in terms of market cap, trailing only Apple.
The rotation away from Nvidia also continued to lift the shares of its competitors Advanced Micro Devices and Broadcom, which rose more than 5% each Thursday.
Nvidia fell 5% Thursday and is down 30% from its October 6 peak, wiping out hundreds of billions of dollars in market capitalization. The rest of the market followed Nvidia lower on worries about possible market impact on Nvidia from the fallout, as Nvidia remains the world's largest AI chipmaker and is wrapped in deals across the industry.
Before Huang's announcement, Nvidia received downgrades from Bernstein, William Blair, and Oppenheimer. Analysts think even with Huang out of the CEO suite, continued investigations into his relationship with the alleged Chinese spy could overhang shares.
The investigation might take months, extending the risk of damaging headlines. Analysts point out the company has no succession plan and may struggle to execute amid what could be negative sentiment within the firm and more intense competition from other chip companies that smell blood in the water.
Nvidia and other chip firms had been under pressure for months from bipartisan anti-data center sentiment across the U.S., and the scandal could reinforce those fears. Congressional hearings are expected to put Huang and the industry in the hot seat relatively soon.
The AI sector peaked on June 22 and is down about 29% from that day's close, as measured by the PHLX Semiconductor Index (SOX). Despite that, the SOX is up 48% year-to-date. And tech stocks were having their best week since May.
"The negative correlation Nvidia has within the semiconductor index has softened significantly," said Kevin Gordon, head of macro research and strategy at SCFR, in a CNBC appearance Thursday.
Gordon added that beyond Nvidia, the consumer backdrop remains relatively positive and robust recent jobs growth hasn't been reliant on the AI data center buildout. Economic fundamentals haven't changed due to the Nvidia developments.
Nasdaq's stumble came a day after the chip market appeared to pick itself up thanks to solid results from CoreWeave. Another "neocloud" firm, Nebius, deflated sentiment around the sector Thursday despite reporting better-than-expected quarterly results. The focus instead turned to its heavy spending and somewhat weak revenue outlook, dragging shares.
Cisco and Applied Materials wrapped up most of the week's earnings news after the close. Applied Materials beat consensus on both earnings and revenue and offered guidance roughly in line with estimates. Shares reacted little in initial post-market trading.
Cisco also exceeded expectations and provided better-than-expected guidance. Shares got an initial 4.6% pop in post-market action.
Turning to PPI, the Briefing.com consensus is 0.4% for headline and 0.3% for core, down from September's parabolic 1.3% headline and 0.7% core rise. Core excludes food and energy.
Treasury yields—not a factor Wednesday with trading closed for Veteran's Day—opened again Thursday and resumed their ascent, climbing double digits across the curve ahead of PPI.
Tuesday's hotter-than-expected October Consumer Price Index (CPI) triggered hawkish remarks from Federal Reserve officials and sent odds of a December rate hike to 100% from 80%, according to the CME FedWatch Tool. The market even builds in 15% chances of an unusual 50-basis point rate increase next month after Fed Gov. Christopher Waller mentioned that as a possibility this week.
Chicago Fed President Austan Goolsbee said this week he's worried about consumer inflation expectations. Next week's retail sales report for October, along with earnings from Walmart, Home Depot, Lowe's, Target and other big-box stores will likely provide a better sense of consumer sentiment.
Though AI spending could be somewhat shielded from higher rates due to deep pockets of the hyperscalers and immense demand for "compute," the rest of the market isn't necessarily immune. Interest-rate sensitive stocks like automakers, home builders, and big-box stores could suffer effects.
Next week's highlight is likely Nvidia's earnings report late Tuesday, its first without Huang. The company's sales outlook is key to see if any fallout is factored in from the scandal. Any clarity on future leadership is also front and center.
In data Thursday, weekly initial jobless claims ticked up a notch to 200,000, still near historic lows. The robust jobs market is one reason the Fed appears to have latitude to raise rates.
Existing home sales for October missed expectations at 3.75 million on a seasonally adjusted annual basis. Consensus was for a slight drop to 3.94 million from a revised 3.97 million in September.
Crude climbed again Thursday after President Trump discounted ideas that his vice president, JD Vance, might talk with senior Iranian officials. Saudi Arabia suffered fresh attacks by Houthi forces.
On Wall Street Thursday, major indexes turned red again and the S&P 500 Index fell below technical support at 7,600 after reclaiming that level earlier this week. Nvidia, rising Treasury yields, and climbing crude were stiff headwinds.
Only two 11 S&P sectors finished higher Thursday, led by energy. Defensive areas like staples and utilities outpaced other sectors in risk-off trading. Materials finished last, with mining shares hurt as gold dropped 3% to its lowest close since late September 2025 on rate hike concerns and a rising dollar.
From an individual stock standpoint, Nebius slid almost 17% despite reporting revenue above analysts' consensus and a narrower-than-expected quarterly loss. However, its revenue outlook disappointed and investors appeared concerned about heavy spending.
Other chip and AI-related stocks were mixed. Super Micro Computer dropped 11% after Bloomberg reported that the U.S. is investigating whether Alice Huang, the alleged Chinese spy who had a relationship with Huang, helped smuggle Super Micro Computer products to China.
CoreWeave plunged nearly 7% after spiking almost 26% on Wednesday following earnings, hurt by a Bloomberg report that the company is weighing a $4 billion investment-grade loan offering.
Other AI-related stocks losing ground included Applied Digital down 6% and Sandisk down 4%.
Alibaba plunged 7% on worries about tighter controls on U.S. chip products in the wake of the Nvidia scandal, Briefing.com noted.
Alphabet rose about 2% on hopes it could make inroads with its own chips if demand for Nvidia's products falls.
Hims & Hers Health dropped 5% after earnings disappointed.
Strategy plunged 6% after Reuters reported that index operator MSCI will remove Strategy and other companies from its global indexes, saying such companies have "fund-type characteristics."
The Dow Jones Industrial Average® ($DJI) dropped 189.40 points (-0.36%) Thursday to 52,297.09; the S&P 500 Index ($SPX) fell 26.98 points (-0.35%) to 7,592.40, and the Nasdaq Composite® ($COMP) gave back 100.09 points (-0.39%) to 25,366.09.