Insightful Word
  • Investing
  • Stock
  • Economy
  • Politics
  • Investing
  • Stock
  • Economy
  • Politics
No Result
View All Result
Insightful Word
No Result
View All Result
Home Stock

Nvidia’s stock market dominance fuels big swings in the S&P 500

admin by admin
September 16, 2024
in Stock
0
Nvidia’s stock market dominance fuels big swings in the S&P 500
0
SHARES
7
VIEWS
Share on FacebookShare on Twitter

By Saqib Iqbal Ahmed

NEW YORK (Reuters) -Nvidia’s huge stock rally is still exerting an outsized influence over the S&P 500 index, reinforcing concerns that broader markets could be hurt if the chipmaking giant’s fortunes turn.

This year’s 140% surge in shares of Nvidia (NASDAQ:NVDA), whose chips are seen as the gold standard in artificial intelligence applications, has accounted for about a quarter of the S&P 500’s 17% gain.

Nvidia showed its powerful hold over Wall Street on Wednesday, when the stock’s 8.2% rally helped drive the S&P 500 to its biggest intraday upswing in nearly two years. The index reversed a 1.6% loss to end the day up 1.1%.

Nvidia jumped after CEO Jensen Huang flagged strong demand for the company’s chips, boosting its market value by more than $200 billion and accounting for 44% of the S&P 500’s surge that day, data from Nomura showed.

Nvidia’s rally “got the whole market moving,” said Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group.

The S&P 500 has struggled to make headway this year on Nvidia’s down days, eking out gains only 13% of the time when the chipmaker’s shares have closed weaker, a Reuters analysis showed.

This year, the index has failed to rise more than 1% on any day when Nvidia’s shares ended lower. In 2020, there were 13 such instances.

For many investors, the recent moves revived worries over a small cohort of stocks dictating the market’s direction.

Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL) and Nvidia have a combined weighting of nearly 20% in the S&P 500, though shares of the first two have gained far less this year than Nvidia’s. 

While recent strength in non-tech sectors has stirred hopes of a broadening rally, a sustained sell-off in any of the tech megacaps could still badly hurt broader markets, analysts said.

“If Nvidia is weak because demand for their product goes down then that’s going to tank the whole market,” said Susquehanna’s Murphy.

OPTIONS BOOST

Traders are keeping a close eye on Nvidia’s options, which have played a major role in boosting recent moves.

Nvidia recently accounted for about 22% of the overall volume of individual stock options traded daily, up from around 5% at the start of the year, making it the most actively traded stock in the options market on most days, Trade Alert data showed.

Nvidia’s gains are amplified when traders rush into upside call options. When buying of these options surges, market makers who sell these contracts are on the hook to buy and deliver more Nvidia shares at the agreed price, leaving them “short gamma,” in options parlance.

The additional purchases to cover risk lift the stock even higher.

“You do see the market keen to buy upside calls when it’s working,” said Chris Weston, head of research at online broker Pepperstone. “When it’s hot, these flows absolutely make a difference.”

Nvidia is not the first stock to have such a powerful sway over the rest of the market.

Tesla (NASDAQ:TSLA), another favorite of nonprofessional traders, displayed similar characteristics a few years ago when the options market amplified the electric vehicle maker’s stock swings, Nomura strategist Charlie McElligott said.

But AI seems to have stirred the imagination of investors even more than EVs.

“The mania that is the actual paradigm shift which AI represents across the corporate landscape, is just making it a magnitudes-larger theme,” he said. “Tesla was never close to that.”

“AI is just its own animal,” McElligott said.

This post appeared first on investing.com

Previous Post

Foreigners pour $31 billion into EM portfolios in August, with Fed in sight -IIF

Next Post

Embraer says Boeing will pay $150 million for withdrawal from tie-up talks

admin

admin

Next Post
Embraer says Boeing will pay $150 million for withdrawal from tie-up talks

Embraer says Boeing will pay $150 million for withdrawal from tie-up talks

Trending News

Can Apple AirPods Pro 2 function as a hearing aid or offer hearing assistance?

Can Apple AirPods Pro 2 function as a hearing aid or offer hearing assistance?

October 22, 2024
Bloom stock poised for massive gains after AEP deal, analyst says

Bloom stock poised for massive gains after AEP deal, analyst says

November 16, 2024
Sensex rockets 1,650 points on April 15, Nifty vaults past 23,300 on US tariff reprieve

Sensex rockets 1,650 points on April 15, Nifty vaults past 23,300 on US tariff reprieve

April 15, 2025
Subscribe to Insightful Word


    Recent News

    China’s May export growth seen slowing to 5.0% amid trade uncertainty: Reuters poll

    China’s May export growth seen slowing to 5.0% amid trade uncertainty: Reuters poll

    June 6, 2025
    FTSE 100 Index shares of 2025: Rolls-Royce, Fresnillo, BAE, and more

    FTSE 100 Index shares of 2025: Rolls-Royce, Fresnillo, BAE, and more

    June 6, 2025
    Asian stocks end mixed: Hang Seng snaps winning streak, Nikkei jumps 0.5%

    Asian stocks end mixed: Hang Seng snaps winning streak, Nikkei jumps 0.5%

    June 6, 2025
    Starlink reportedly secures key licence in India, moves closer to launching services

    Starlink reportedly secures key licence in India, moves closer to launching services

    June 6, 2025

    Recent News

    China’s May export growth seen slowing to 5.0% amid trade uncertainty: Reuters poll

    China’s May export growth seen slowing to 5.0% amid trade uncertainty: Reuters poll

    June 6, 2025
    FTSE 100 Index shares of 2025: Rolls-Royce, Fresnillo, BAE, and more

    FTSE 100 Index shares of 2025: Rolls-Royce, Fresnillo, BAE, and more

    June 6, 2025

    Latest News

    • China’s May export growth seen slowing to 5.0% amid trade uncertainty: Reuters poll
    • FTSE 100 Index shares of 2025: Rolls-Royce, Fresnillo, BAE, and more
    • Asian stocks end mixed: Hang Seng snaps winning streak, Nikkei jumps 0.5%

    About Insightful Word

    • Contacts
    • Cookie Notice
    • Privacy Policy
    • Terms of Service
    • Trading tools
    • Contacts
    • Cookie Notice
    • Privacy Policy
    • Terms of Service
    • Trading tools

    Copyright © 2025 Insightfulword.com. All Rights Reserved.

    No Result
    View All Result
    • Investing
    • Stock
    • Economy
    • Politics

    Copyright © 2025 Insightfulword.com. All Rights Reserved.