- Nvidia shares fell over 5% pre-market following CEO investigation and personal admission
- Dow Jones and S&P 500 futures rose despite Nvidia's decline, Nasdaq 100 futures fell slightly
- Nvidia's weight is significant in S&P 500 and Nasdaq, less so in Dow due to index structure
Even as Nvidia is having a rough day, with stock down up to 6% pre-market, the US stock market futures have reacted mixed. The Dow Jones Industrial Average and S&P 500 are up pre-market, whereas the tech-heavy Nasdaq 100 stays under pressure.
Shares of Nvidia were trading at $176.96 in early US pre-market deals, down 5.19% from Friday's close of $186.64, at 4:33 am New York time. The fall follows the board's decision to investigate whether chief executive Jensen Huang was the target of a foreign intelligence effort, and Huang's admission to employees that he had been unfaithful to his wife.
In Frankfurt, the slide was steeper. Nvidia fell more than 6%, which would wipe about $270 billion off its market value from Friday's close, Reuters reported, citing LSEG Datastream.
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Yet US index futures barely flinched. S&P 500 futures were up 0.22% and Dow Jones futures had gained 0.56%. Only Nasdaq 100 futures were in the red, and even there the drop was a modest 0.12%.
The Index Maths
Part of the answer lies in how the indices are built. The Dow is price-weighted, so a stock's influence depends on its share price, not the company's size. At under $180, Nvidia ranks 22nd of the 30 Dow stocks with a weight of about 2%, according to Slickcharts. Goldman Sachs, priced above $875, carries roughly 10%.
The S&P 500 is weighted by market value, and there Nvidia matters more. It is the index's second-largest stock at about 6.3%, behind Apple at about 7.4%. A 5% fall in Nvidia shaves roughly 0.3 percentage points off the index. With S&P 500 futures still higher, the rest of the market is more than making up for it.
The Nasdaq 100 is where Nvidia is hardest to ignore. At about 11% of the index, its slide would drag on the benchmark by over half a percentage point. That index's futures are down only about a fifth of that.
A Problem That Stays With Nvidia
The bigger reason is that investors are treating this as Nvidia's problem, not the chip industry's.
Before the opening bell, AMD was up 1.44%, Broadcom 1.20% and chip-equipment maker ASML 2.44%. The iShares Semiconductor ETF was down just 0.57%, and Nvidia is one of its holdings.
In Asia, Nvidia's suppliers rallied. TSMC shares jumped 6.5%, SK Hynix rose 4.7% and Samsung Electronics gained 2.9%, Reuters reported, recovering from last week's sell-off in AI stocks.
Chris Weston, head of research at Pepperstone in Melbourne, said the timing was poor for Nvidia. "The market's probably telling you now this does no favours to the stock whatsoever," he told Reuters, pointing to doubts over the data-centre build-out.
Ryu Young-ho, senior analyst at NH Investment & Securities, told Reuters that rivals such as AMD could draw more attention in the short term. He added that Nvidia's products would be difficult to replace, which limits the damage.
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