S&P 500 Forecast: SPX falls as Nvidia tanks on CEO Huang’s resignation

US futures         

Dow futures -0.03%, S&P 500 futures -0.4%  & Nasdaq futures  -0.9%

European futures

FTSE 0.18%,  DAX  0.26%

• US stocks fall as Nvidia slumps 7%
• Nvidia CEO Jensen Huang resigns after reports of another affair
•  USD rises on hawkish Fed expectations
• Oil rises modestly after steep losses this month

U.S. stocks fall as Nvidia plunges and AI concerns return

U.S. stocks are opening lower on Thursday after Nvidia shares plunged 7% pulling the broader market lower as investors also weigh up the potential impact on the wider AI trade.

Today's sell-off erases yesterday's gains, which came following strong results from CoreWeave, helping the AI sector regain some footing.

Sentiment towards AI stocks has been fragile following the midterm elections last week, which raised concerns over a slowdown in data centre development. While dip buyers have stepped in during the immediate sell-offs, the sector remains very much under the spotlight.

On the data front, U.S. jobless claims rose by 9,000 to a seasonally adjusted 200,000 for the week. This was above the 195,000 expected but remains low by historical standards.

Attention now turns to Fed speakers, with speeches from Mary Daly and New York Fed President John Williams due later. Investors will be watching for signals about the pace of rate hikes from the Fed after hotter-than-expected U.S. inflation figures earlier this week and after Governor Christopher Waller brought the prospect of a 50-basis-point rate hike in December to the table.

Corporate movers

Nvidia fell 13%, wiping more than $2 trillion off its market value following reports that CEO Jensen Huang has resigned. The reported resignation comes amid claims that he had an affair with a woman within the company. Nvidia accounts for around 6% of the value of the S&P 500, putting pressure on the broader index.

Nvidia reports earnings next Tuesday. Questions are now being raised over who will replace Jensen Huang. In the meantime, Colette Kress has reportedly been made interim CEO of Nvidia. She has been executive vice president and chief financial officer since joining in September 2013.

AMD is rising over 2.5% following an analyst upgrade to outperform. The analysts cite AMD's product line and AI accelerators, which are poised to take market share from competitors Intel and Nvidia.

S&P 500 forecast – technical analysis

The S&P 500 recovered from the 7,300 low, rising back above the 200 EMA to 7,620, the horizontal resistance level, and the 50 EMA at 7,635. Buyers will look to extend the recovery above the 50 EMA at 7,645 to put the price on a firmer footing.

A rise above 7,700 opens the door to 7,840 and fresh record highs.

On the downside, immediate support is seen at 7,500, the September low. A break below here exposes the 200 EMA at 7,375, ahead of 7,300, the November low. Sellers would need to take out this level to create a lower low.

FX markets – USD rises GBP/USD falls

The U.S. dollar is rising, reaching a 19-month high, supported by safe-haven flows, hawkish Fed expectations following hotter-than-expected CPI data earlier in the week, and comments from Fed policymakers.

EUR/USD is holding steady after falling to 1.1065, an 18-month low, on U.S. dollar strength. The market is questioning the ECB's ability to hike rates over an extended period. After two hikes already this year and another expected in December, this could be one of the last hikes given growing economic uncertainty over the growth outlook. ECB policymakers could adopt a more cautious stance after December.

GBP/USD is falling amid a stronger U.S. dollar, despite stronger-than-expected UK GDP. Q3 GDP rose 0.7% quarter on quarter, in line with forecasts and marking the strongest growth in 2.5 years. The data supports the Bank of England's decision to hike rates by 25 basis points last week. The market is pricing in a 75% probability of a further 25-basis-point hike in December.

Oil extends declines on hopes of diplomacy in the Middle East

Oil prices are under pressure once again on Thursday, as investors weigh ongoing geopolitical tensions against rising crude output.

The market continues to assess developments in the Middle East, the likelihood of diplomatic progress and ongoing attacks on tankers in the Strait of Hormuz. However, OPEC crude oil production also rose in October, despite shipping disruptions through the Strait.

While optimism over a diplomatic solution has picked up following the midterm elections, and Trump has downplayed the need for further military action, Iran's comments that no enriched nuclear material will leave the country raise concerns over Washington and Tehran's ability to end the eight-month war diplomatically.

Attention will also be on U.S. EIA oil stockpile data, which was delayed by a day owing to the national holiday.