Nvidia slides 2.7% as Jensen Huang exit rattles chip stocks; Nasdaq 100 falls 1%

Shares of embattled chipmaker Nvidia fell 2.66% to $161.77 on Friday, extending the more than 4% decline in the previous session as investors continued to react to the controversy surrounding founder and CEO Jensen Huang's exit.

The renewed slide in chipmakers weighed on Wall Street, overshadowing relief from softer-than-expected monthly US wholesale inflation data. According to Bloomberg, a closely watched gauge of semiconductor stocks fell 3% as Nvidia wiped out its earlier gains. The Nasdaq 100 lost about 1%, while the S&P 500 edged lower despite gains in most of its constituent stocks.

The October producer price index (PPI), a measure of wholesale inflation, rose 0.3% month-on-month, below the 0.4% increase forecast by economists polled by Dow Jones. However, producer prices climbed 6.5% from a year earlier, marking their fastest annual increase since November 2022.

Bloomberg reported that components of the PPI that feed into the Federal Reserve's preferred inflation gauge were weaker in October, offering some relief to traders concerned about more aggressive monetary tightening.

"While some committee members may advocate more aggressive action, we should expect a 25-basis-point rate hike," Jeffrey Roach of LPL Financial said, according to Bloomberg. "Given the fragility of the broader economy, a larger 50-basis-point increase could pose unnecessary risks."

The Federal Reserve is widely expected to raise interest rates by a quarter percentage point in December. Figures released earlier this week showed that a gauge of underlying consumer inflation had posted another firm advance during October.

Short-dated US Treasuries outperformed as investors assessed the inflation data and its implications for the Fed's policy outlook.