The release of a hotter‑than‑expected October consumer‑price index on Tuesday sparked a swift market decline, leaving the S&P 500 closed about 0.4% lower and the semiconductor sector experiencing its steepest sell‑off since 2019.
Market reaction to the inflation data
Within five minutes of the 8:30 a.m. ET CPI announcement, S&P 500 futures slipped roughly half a percent on volume that far exceeded the morning average. Nasdaq 100 futures briefly erased those losses by 10 a.m., only to slide again before recouping much of the damage later in the afternoon. The broader equity market felt the pressure, with the S&P 500 ending the day flat after an earlier rebound, while the PHLX Semiconductor Index also fell about 0.4%.
Bond markets reacted in kind. The five‑year Treasury yield recorded its largest one‑day jump since September, and the ten‑year yield briefly rose above the 5% mark as traders priced in a higher likelihood of a December rate hike.
Chip sector losses mount
Yahoo Finance’s basket of 62 chip‑related stocks has shed nearly $5 trillion in market value since October 6, representing roughly a quarter of the basket’s total worth. That decline exceeds the approximately $2.7 trillion loss recorded by the entire S&P 500 over the same period, even though the chip basket includes firms outside the index.
Memory‑chip makers Micron and SanDisk, along with chip designer Arm, each slipped between 1% and 3%. By contrast, AMD and Broadcom posted gains, extending the upward momentum they had shown on Monday.
Nvidia’s steep decline and analyst views
Shares of Nvidia dropped about 6% on the day, pushing the stock’s relative‑strength index down to 24 on a scale of 0 to 100 – its most oversold reading since June 2019. The decline follows ongoing scrutiny of CEO Jensen Huang, a factor that analysts say has added to the stock’s volatility.
Bank of America’s head of U.S. equity and quantitative strategy, Savita Subramanian, warned that the S&P 500 itself carries heightened risk, describing it as “the most crowded equity ticker in the world.” She suggested that the index’s broad exposure could amplify market swings.
In contrast, the equal‑weight version of the S&P 500, which gives each constituent the same influence, has risen about 4% since October 6 and recorded a record close on November 4, underscoring the divergence between the market‑cap‑weighted index and a more evenly distributed benchmark.
Some market participants view Nvidia’s tumble as a buying opportunity. Bernstein analyst Stacy Rasgon told Yahoo Finance that if Jensen Huang remains at the helm, the sell‑off may be overdone and could present a strong entry point for investors.
The combined effect of the inflation surprise, heightened bond yields, and sector‑specific pressures has left chip stocks with a near $5 trillion erosion in value, while the broader market continues to grapple with uncertainty surrounding future rate moves and equity valuations.
Mitchell Landsberg is a Senior Technology Correspondent at News Raise. He covers consumer electronics, artificial intelligence, software developments, and digital privacy trends.
