S&P 500 futures and Nasdaq 100 futures are both trading higher before the bell on Wednesday, as better-than-expected results from CoreWeave look to be easing some of the current concerns around tech stocks.
Stocks slumped on Tuesday as a dollop of macro spiciness was added to the entrée of AI angst that the market was already having trouble digesting.
Core CPI inflation rose 0.3% month-on-month in October, a sharper increase than economists anticipated. Ahead of the data, Fed Governor Chris Waller suggested that a print that hot would spark discussion over whether the central bank should raise interest rates by 50 basis points at its upcoming December meeting — effectively planting his flag that at least 25 basis points of tightening is a foregone conclusion.
That being said, the selloff didn’t have a big “macro fears” component. While implied correlations rose — which tends to happen when there’s a common catalyst that could (negatively) impact many names in the market — the VIX Index dipped, driven primarily by falling demand for out-of-the-money S&P 500 puts.
In fact, it was the first session in which the S&P 500 fell at least 0.25% while the VIX moderated by 0.25 points since May 7.
Robinhood traders apparently felt fine fighting the Fed by buying the dip: net daily purchases of single stocks were the third highest on record, trailing only June 12 (#1, SpaceX’s IPO) and September 23 (#2).
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DeepSeek 2.0
Stunning news tied to a little-known Chinese entity wreaking havoc on the world’s most valuable chip company.
That’s a succinct, if vague, summary of what’s at the heart of Nvidia’s recent rout. It’s also the Coles Notes for the DeepSeek freak-out in January 2025.
In announcing the launch of the EntryPoint newsletter, my former colleague David Crowther noted:
Across every day of trading from the last three years, one day in particular stands out: DeepSeek day, when the market was briefly extremely concerned that we’d need less AI compute, not more, over time. Nvidia shed almost $600 billion in market cap, dipping 17% in a single session. On balance, Robinhood traders thought the risks were overblown.
They were, in hindsight, right.
One thing’s for sure: retail traders are once again pulling out the DeepSeek playbook to handle this seismic shock to Nvidia stock.
The admission from Jensen and the announcement of an investigation by Nvidia’s board came this weekend. This story has grown at least three octopus’ worth of tentacles since then, with myriad reports on who knew what, and when, and what the next steps might be.
Robinhood traders clearly don’t believe this news will make a meaningful dent in the GPU giant’s earnings power. Tuesday was the second-highest day of net purchases of Nvidia shares on record, while Monday was the third.
Every stock in SMH and SOXX is up this week besides Nvidia. The chip designer’s travails have overshadowed many, but not all, of the cumulative gains across the semis, memory, and storage space this week.
Aside from Nvidia, the other chip stocks that rank in the top 25 for total dollar volumes on Robinhood over the past month are Advanced Micro Devices, Micron, Sandisk, Broadcom, Intel, Marvell Technology, and SK Hynix. All have been net purchased so far this week except for the custom AI chip behemoth (with Marvell, another custom chip player, only receiving relatively tepid buys).
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Via Justina Lee on X:
