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

NEW YORK - 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.

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. 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.

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. 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."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.

Business Business Latest News, Business Business Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Stock market today: S&P 500, Nasdaq slump as Nvidia struggles ahead of earningsStocks are eyeing a bid for fresh record highs after Jerome Powell made it crystal clear the Fed is ready to pivot to lowering rates in September.
Source: YahooFinanceCA - 🏆 47. / 63 Read more »

Stock market today: Dow hits record, S&P 500, Nasdaq rise despite fall in Nvidia sharesThe dust is settling after Nvidia's solid but disappointing earnings, as investors reassessed the prospects for techs.
Source: YahooFinanceCA - 🏆 47. / 63 Read more »

Nvidia’s earnings will test the S&P 500’s US$4 trillion recoveryThe almost US$3 trillion rally in Nvidia Corp. shares over the roughly two years since ChatGPT’s unveiling has virtually rewired the U.S. stock market, giving the artificial intelligence chipmaking giant an outsized influence on a bevy of equity indexes.
Source: BNNBloomberg - 🏆 83. / 50 Read more »

Stock market today: S&P 500, Nasdaq rise as rate-cut conviction runs highThe market is weighing how deeply the Federal Reserve could cut interest rates in September on the eve of a key speech by Jerome Powell.
Source: YahooFinanceCA - 🏆 47. / 63 Read more »