Wall Street faced a major test last week as Nvidia’s stunning leadership shake-up dominated the headlines and brought more uncertainty to the AI trade. Despite the turbulence, the S & P 500 secured a weekly gain of 2.5%, while the tech-heavy Nasdaq added 2.3%. Both indexes were up so much on Monday and Wednesday that declines on Tuesday, Thursday, and Friday were no match. In fact, both the S & P 500 and Nasdaq have made sizeable dents in the losses they suffered in the postelection market rout on Nov. 5. While Nvidia shares fell another 2% on Friday, the market ended the week under pressure for a different reason. It was the potential for multiple Federal Reserve rate hikes over the next few meetings that led to the selling. Before Friday’s open, the October producer price index turned in its highest yearly reading in nearly four years. Headline PPI, a measure of wholesale inflation, was cooler than expected month over month. However, its year-over-year increase to 6.5% was all anyone cared about, especially after Tuesday’s hot consumer inflation report . Here’s a closer look at the three things that shaped our view of last week’s market. Nvidia’s C-suite shake-up Nvidia’s leadership crisis sent shares tumbling nearly 13% for all of last week, bucking a broader rebound in semiconductor stocks. The Nvidia sell-off began Monday after reports that the chip giant’s board was investigating CEO Jensen Huang’s relationship with a woman suspected of spying for China. The scandal escalated with reports that Huang had affairs with two Nvidia employees, culminating in his resignation Thursday. Longtime CFO Colette Kress was named interim CEO, a move that Jim Cramer was pleased with. While remaining confident in Nvidia’s technology and management bench, Jim acknowledged the uncertainty surrounding its future . “A Jensen-less Nvidia is an Nvidia many will not want to own,” he said Wednesday on ” Mad Money .” We downgraded Nvidia to our hold-equivalent 2 rating Tuesday. While not looking to buy the dips, Jim said he was not abandoning the company either . Jim pointed to Apple’s success after Steve Jobs and expressed confidence in Kress to right the ship. For longtime shareholders sitting on substantial gains, Jim emphasized capital preservation, urging investors to consider taking some profits rather than risk giving them back. He said Thursday: “If you are one of those millionaires, don’t become a hundred-thousandaire.” The next test for Nvidia will come when it reports earnings on Tuesday evening. Swapping Intel for AMD We’re planning to exit our position in Intel and use the proceeds to initiate a position in rival Advanced Micro Devices once our trading restrictions allow. Jim said that Friday’s decline in AMD is a ” terrific opportunity ” to buy the stock. The move reflects our growing confidence in AMD’s ability to capitalize on booming demand for data center chips. Part of our thinking is that the turmoil at Nvidia could create opportunities for…
Read More: Nvidia’s leadership crisis rattles Wall Street. How we’re adjusting