Nvidia (NVDA) Shares Drop 5.5% Amid Inflation Data and Rate Hike Hopes

Stock futures rose modestly on Tuesday night after a session marked by losses due to Nvidia's (NVDA) 5.5% share decline and hotter-than-expected inflation data. Dow Jones Industrial Average futures gained 88 points (0.2%), S&P 500 futures climbed 0.2%, and Nasdaq-100 futures increased 0.4%. In regular trading, the Dow fell over 150 points, while the S&P 500 and Nasdaq Composite dropped 0.4% and 0.7%, respectively.

Nvidia's stock slide was driven by concerns surrounding CEO Jensen Huang's affair linked to an alleged Chinese spy, causing the company's market cap to fall to approximately $4.07 trillion, its lowest since late March. The broader market also reacted to October inflation data showing a 0.4% monthly increase in the consumer price index, exceeding expectations. This fueled nearly 90% probability of a 0.25% Federal Reserve rate hike in December, as monitored by CME Group's FedWatch tool.

BlackRock's CIO of global fixed income, Rick Rieder, stated that higher inflation levels make a rate hike likely, with the uncertainty lying in the hike's size. Comments from Fed Governor Christopher Waller also increased market pricing for a quarter-point rate increase. Investors will watch developments in the artificial intelligence sector after CoreWeave released third-quarter revenue exceeding estimates, briefly boosting its stock.

This matters because inflation data and Nvidia's share decline are influencing market sentiment and Fed rate hike expectations, which in turn affect trading volumes and stock index movements, key indicators for ordinary investors' portfolio valuations.