By Jamie McGeever
ORLANDO, Florida, Nov 12 (Reuters) – US stocks fell on Thursday, as investors digested the dramatic developments at AI giant Nvidia, where CEO Jensen Huang resigned in the wake of multiple reported extramarital affairs, one of which was with an alleged Chinese spy. However, given the seismic nature of the news, and a sharp rise in bond yields and oil prices, Wall Street’s losses were pretty mild.
In my column today, I look at Wall Street’s resilience in the face of the recent AI tremors, as investors have rotated into other under-owned parts of the market. As a result, the S&P 500 is less than 3% off its record high. But can it withstand the Nvidia earthquake?
Today’s Key Reads
• Jensen Huang steps down: the hands-on kingmaker behind the AI boom
• EXCLUSIVE-Chinese AI firms rush to secure Nvidia chip capacity as spy scandal stirs fear of US curbs
• White House discussing Howard Lutnick’s future as Commerce secretary, people familiar say
• Dollar zooms on bets US can absorb higher rates: Mike Dolan
• US starts 2027 fiscal year with record October budget deficit of $404 billion
• Today’s Key Market Moves STOCKS: Japan -0.7%, China -0.8%. Europe touches new high, UK +0.3%. Nasdaq, S&P 500, and Dow all -0.4%. Russell 2000 -1.6%.SECTORS/SHARES: Nine sectors in the S&P 500 fall, two rise. Materials -1.5%, energy +1.5%. Airlines -5%. Nvidia -4.3%, Super Micro Computer -11%. Advanced Micro Devices, Broadcom +6%.FX: Dollar index +0.3%, highest since April 2025. Biggest G10 decliner Aussie dollar, -0.6%. Biggest EM decliners Brazilian real, Chilean peso, South African rand, all -1%.BONDS: US yields up as much as 17 bps at short end, curve flattens for fourth session in a row. 30-year US auction draws lackluster demand, 0.5 bps tail.COMMODITIES/METALS: Oil up 3%. Gold -3% to one-year low of $3,853/oz.
Today’s Talking Points:
Huang turn
Nvidia CEO Jensen Huang’s resignation, under a cloud of scandal, is a bombshell. It will ripple, to varying degrees, across the worlds of AI and tech, financial markets, US politicsand wider US-China relations. Only hours after Huang departed the company he founded and shaped, US President Donald Trump was weighing in on who should replace him, and was also considering Commerce Secretary Howard Lutnick’s future.
Zooming in on Nvidia shares specifically, more volatility is on the cards. The stock fell 4% on Thursday, taking its decline so far this week to 11%. It’s down more than 30% from the October 6 peak, which translates into $1.8 trillion of market cap lost in five weeks. Shares are on track for their sixth weekly fall in a row, the longest losing streak since 2012, and several brokers have cut their price targets and recommendations this week. That’s a lot of doom and gloom. Too much?
De Cos the sky is blue
As Federal Reserve Chair Kevin Warsh goes about overhauling how the US central bank operates, big changes are also underway across the Atlantic at the European Central Bank. Here, though, it’s around personnel. There are three key positions to fill in the coming months — influential board member Isabel Schnabel, Chief Economist Philip Lane, and President Christine Lagarde.
So far, two names have been put forward for the top job: Spain’s nominee Pablo Hernandez de Cos, currently at the BIS, and the Netherlands’ nominee Klaas Knot, its former central bank chief. Broadly speaking, de Cos is more dovish than Knot. The FT reported on Thursday that France has signaled it may support de Cos. If this is the case, would Germany object?
Communication breakdown
As Warsh indicated last month, the US central bank will reduce the number of rate-setting meetings. The Fed on Thursday confirmed its 2027 schedule — the October meeting will now be “dedicated to the discussion of broad monetary policy strategy issues,” and the final policy meeting will be in November rather than December.
Talking of Fed communication, an interesting new study has landed this week. The study — covering more than 300,000 research reports from 26 bank forecasting teams, across 26 years — finds that greater Fed communication leads to more accurate Fed funds forecasts, but less accurate economic and Treasury yield forecasts. In short, Fed communications improve our understanding of policy, while “crowding out” independent analysis of the economy. Is that a trade-off worth making?
What could move markets tomorrow?
• Nvidia fallout
• Germany wholesale inflation (October)
• Euro zone GDP (Q3, flash estimate)
• US producer price inflation (October)
• US Fed officials scheduled to speak include Susan Collins, Lorie Logan, Michelle Bowman and Mary Daly
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(Reporting by Jamie McGeever; Editing by Nia Williams)
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