Wall Street withstands AI blues. What about an Nvidia shock?
SPY•The S&P 500 is about 3% below its record despite a 13.7% technology-sector decline and Nvidia’s stock falling about 40% from its October 6 high. Rotation into healthcare and consumer staples has helped support the broader market, but pressure on AI stocks may continue.
1. Rotation cushions losses
The S&P 500 is holding up as AI stocks fall: it is around 3% below its all-time high, while the equal-weighted index is up nearly 5% since October 6 and hit a record last week. Over that period, healthcare gained 13.1% and consumer staples rose 11.8%, while technology fell 13.7%.
2. Nvidia slide deepens
Nvidia shares fell as much as 14% in early trade after CEO Jensen Huang resigned, and were about 40% below their October 6 high. The article says the decline erased more than $2 trillion in market value in a little over a month. The Philadelphia Semiconductor Index dropped 12% on November 5, its second-biggest loss on record.
3. Risks remain
The article cites aggressive deleveraging, reversals in crowded positions and liquidation across equity and quantitative funds. Goldman Sachs’ sentiment and positioning indicator fell to its lowest level since April 2025. Ongoing controversy at Nvidia, policy uncertainty around the new-look US Congress and the prospect of further Federal Reserve rate hikes could keep pressure on the AI trade.
