Nvidia Falls About 5% as Dow, Nasdaq Rally in Early Trading

By Sophie Lindqvist

The Dow Jones Industrial Average rose 1.4% to 52,009.10 about 25 minutes into Monday trading, even as Nvidia shares fell about 5%. The S&P 500 gained 1.7% to 7,499.41, and the Nasdaq Composite Index jumped 2.1% to 25,087.25. That split was striking: one AI leader fell while the broader technology market advanced.

For investors, the immediate question was whether trouble at Nvidia would spread across the AI sector. The early index moves suggested otherwise. Other AI names recovered, and Wall Street shrugged off the chip company's decline.

Takeaway: The early rally separated Nvidia's problem from the rest of the AI sector.

What happened at the open?

Wall Street moved higher early Monday as three developments lined up. The broad indexes advanced, crude prices fell more than four percent on diplomatic hopes concerning the US-Iran war, and Nvidia sank after the company launched an investigation into CEO Jensen Huang.

The market did not treat Nvidia's roughly 5% fall as a reason to sell the rest of the group. Google parent Alphabet and Micron were both higher after AI stocks had sold off sharply on Thursday.

“The market implicitly decided that whatever happened last week was a one-day event,” said Steve Sosnick of Interactive Brokers. His summary captured the mood of the session: investors looked past the previous week's turbulence instead of treating it as an ongoing problem.

Takeaway: Falling oil and a rebound in AI names supplied enough support to outweigh Nvidia's roughly 5% decline.

Why did Nvidia fall while other AI stocks rose?

Nvidia's decline followed the company's announcement that it had opened an investigation into Jensen Huang. The action came after reports that Huang had been targeted by Chinese intelligence. That made Nvidia the clear outlier in an otherwise higher early market.

“The market isn't caught up in the notion that this situation is going to have a systemic domino effect,” said Briefing.com analyst Patrick O'Hare. In other words, traders had not treated the Nvidia episode as the start of a wider chain of problems across AI stocks.

The index gains support that interpretation, though only for the early session. The Nasdaq Composite Index rose 2.1% despite Nvidia's fall, while the broader S&P 500 gained 1.7%. Neither move fit a market convinced that one company's CEO investigation had become an industry-wide shock.

That distinction also explains why Alphabet and Micron could rise in the same session. Their gains showed that the wider AI group was not falling in unison with Nvidia. Investors separated the group from the company facing the investigation.

Takeaway: Nvidia's CEO news did not drag down other AI stocks during the opening 25 minutes of trading.

How did investors read the split?

O'Hare described the response in more direct terms: “Nvidia for now, is being treated as a one-off story,” he said. He added that investors were being driven more by “an inclination to buy into last week's weakness.”

The buying explanation matters because it set the tone for other AI shares. Alphabet and Micron rose after Thursday's sharp sell-off, while Nvidia remained under pressure from the investigation into Huang. The market was sorting stocks by the news attached to them, not moving in one direction on AI.

Sosnick's “one-day event” view and O'Hare's “one-off story” description pointed to the same early-session judgment. Both analysts described a preference for looking past the previous shock rather than expecting it to spread.

That is a limited kind of reassurance. It says investors had not linked the Nvidia news to a wider AI problem. It does not resolve the investigation, change the roughly 5% fall in Nvidia shares, or guarantee the rebound would continue.

Takeaway: Investors bought last week's weakness and treated Nvidia as a separate problem.

How much did oil matter?

Crude's more-than-four-percent decline added another positive shift to the opening. It followed hopes for diplomacy in the US-Iran war, giving equities a supportive backdrop alongside lower oil prices and higher AI stocks.

Neither the oil move nor the equity rally was a direct response to Nvidia. Together, they produced a market able to absorb one large technology decline without surrendering its broader gains.

The timing also put oil on the same agenda as inflation this week. October consumer and wholesale inflation reports are due this week, and Monday's crude move gave those scheduled releases a prominent place in the market backdrop. The reports themselves had not yet arrived.

Takeaway: Lower oil helped the opening, while inflation data still awaited a separate test of the broader mood.

What could this week's inflation reports change?

This week's calendar includes October reports on consumer and wholesale inflation. They come after an early session that combined a 1.7% S&P 500 gain, a 2.1% Nasdaq Composite Index gain, a roughly 5% Nvidia decline and a more-than-four-percent drop in crude.

The stock market had already expressed a view on Nvidia: treat it as a one-off. The inflation releases could test a broader willingness to keep buying after last week's losses. The report offered no forecast for the figures or their market impact.

That distinction matters for how much confidence to place in the rally. The opening showed investors could look past a report about one company's chief executive when other market signals were favorable. New inflation data could alter those signals, or at least change the willingness to buy that produced the early gains.

“For now” carried real weight in O'Hare's assessment. His description of Nvidia applied to current trading, not a settled judgment about what follows. The same caution applies to the market's reaction to lower crude ahead of the inflation reports.

Takeaway: Monday's rally reflected the morning's headlines, not the inflation data due this week.

What should traders watch next?

The first test is whether the separation between Nvidia and the rest of the AI group holds. O'Hare said the market had not caught up with the idea of a systemic domino effect. A move that spread beyond Nvidia would challenge the early assumption, although Monday's early prices did not show one.

The second test is whether the buying impulse lasts beyond the opening 25 minutes. Sosnick described the market as deciding that last week's events were a one-day event. The snapshot did not establish how sentiment would develop through the session or into the inflation reports.

The third test is how new consumer and wholesale inflation figures sit against a backdrop of lower oil and rising stocks. Those releases are due this week. They could strengthen or weaken the appetite for gains that made Monday's opening so broad.

None of these tests changes what the early tape already showed. The Dow, S&P 500 and Nasdaq Composite Index all rose, and oil fell sharply, while Nvidia lost roughly 5%. The market had drawn a line around one company-specific investigation instead of treating it as a threat to the whole AI trade.

Watch Nvidia's relative performance and the October inflation releases; together, they will test whether Monday's broad rally can hold.