Nvidia jumps 3% after four-session slide as chip index posts similar gain
Key Facts
Nvidia shares rose about 3% on Tuesday, November 3, after falling in the previous four sessions, in a rebound that brought chip stocks back to the forefront of U.S. trading. The stock closed at $208.73, compared with $202.06 in the previous session, according to EL7 data. The gains coincided with a 3% rise in the Philadelphia Semiconductor Index, showing that the recovery extended across the sector rather than being limited to the company. Reuters said Nvidia's gain came as technology stocks advanced, while investors tracked the U.S. midterm election results scheduled for Tuesday. The report described the election as one of the main catalysts for markets this week.
Other stocks in the sector also posted strong performances during the session, with AMD rising 5.1% ahead of its quarterly results after the market close. Reuters reported that Broadcom and Micron were also among the stocks supporting broader gains in chipmakers. AMD's rise came ahead of a near-term test that could gauge investor confidence in demand for the sector, as the stock benefited from the broader rebound. The move coincided with growth stocks trying to regain their footing after recent selling pressure. Caution was not confined to a single session: the Nasdaq-100 had closed on Monday more than 10% below its record high, confirming that it had entered correction territory.
Oil's decline helped ease pressure on market sentiment, with Brent crude continuing to fall by more than 1% in Tuesday trading after a sharp drop in the previous session. Oil prices had fallen by more than 6% on Monday amid hopes for a peace deal between the United States and Iran following Iranian talks with Qatari officials. According to Reuters, crude's decline extended into the following session, keeping geopolitical developments and energy prices among the factors influencing trading. The move followed Monday's session, when Nvidia rose 1.5% and Amazon gained 4.1% as growth stocks and megacap companies advanced. But crude's decline on Tuesday did not erase the market volatility that accompanied its sharp drop the previous day.
The backdrop for the chip sector remained mixed despite the session's rebound, particularly after Intel shares fell 2.6% on Monday, according to a Reuters report, following their biggest one-day drop since the 1980s on Friday. In its earnings announcement, the company said third-quarter revenue was $16.5 billion, up 21% year over year, and that revenue and earnings per share exceeded its guidance for the quarter. Intel forecast fourth-quarter revenue of $15.0 billion to $16.0 billion and non-GAAP earnings per share of $0.25. The company said demand for its processors remained strong and that its immediate priority was to increase supply to meet demand for the Xeon family. Its chief financial officer also said third-quarter data-center revenue growth was the strongest the company had seen in 15 years.
Still, technology companies' spending on AI infrastructure remained a concern for investors. The Nasdaq fell 5.3% in October amid concerns that massive spending on AI infrastructure was outpacing companies' ability to generate cash in the near term. Jake Dollarhide, chief executive of Longbow Asset Management, said, "Companies have to recognize that there is a limit to what they can spend and what that means for shareholder value." In the previous session, the S&P 500 lost 0.51% to close at 7,541.40, while the Nasdaq fell 1.07% to 25,164.32. On Intel, its chief financial officer said a slowdown in the PC market could continue through the first half of the following year, as the company continued investing to increase supply.