US STOCKS-Wall St slides as Nvidia uncertainty drags tech shares lower

By Chuck Mikolajczak and Niket Nishant

NEW YORK, Nov 13 (Reuters) - US stocks were lower on Friday, as concerns about Nvidia pressured technology shares, while a reading on inflation failed to alter expectations for more rate hikes from the Federal Reserve.

Nvidia's NVDA.O shares fell 2.2% and were poised for their sixth straight week of declines, their longest streak since October 2012, after CEO Jensen Huang's resignation on Thursday, following revelations of his relationship with a businesswoman suspected by the US of spying for Beijing.

The Financial Times reported that Nvidia's board has approached British chipmaker Arm Holdings CEO Rene Haas in its search for a potential successor to Huang.

The uncertainty about leadership at the chipmaker has raised concerns about the durability of the AI trade, given Nvidia's primary role in the industry's boom and its financial ties to several companies in the sector, which has been a pillar of the bull market in equities.

"The tech trade, the AI trade, Nvidia is going to go through a period of volatility, and you're going to see the bulls and bears kind of wrestle on where this narrative goes through the rest of the year ... there's been a loss of confidence," said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan.

"The market and investors are trying to navigate what does the AI theme look like when we have the absence of Jensen Huang, who was basically the AI champion and willing to use Nvidia's balance sheet to fund a lot of this AI expansion. That's gone."

The Dow Jones Industrial Average .DJI fell 5.36 points, or 0.01%, to 52,291.73, the S&P 500 .SPX lost 38.87 points, or 0.51%, to 7,553.53 and the Nasdaq Composite .IXIC lost 236.49 points, or 0.93%, to 25,129.60.

Despite the recent volatility, the major indexes were on track for weekly gains, with the Nasdaq and S&P 500 both set to snap a four-week streak of declines.

The Philadelphia Semiconductor Index .SOX fell 3.7%, with Advanced Micro Devices AMD.O and Broadcom AVGO.O the biggest drags.

Neoclouds CoreWeave CRWV.O and Nebius NBIS.O also slumped, while data center-related firms IREN IREN.O and Applied Digital APLD.O retreated as well.

The losses come ahead of AI company Anthropic's much-anticipated IPO next week, which could test investor appetite for established AI heavyweights as money potentially shifts toward the new entrant.

The S&P 500 technology index .SPLRCT was off 1.6% as the worst-performing of the 11 major S&P sectors. But Microsoft MSFT.O shares edged up 0.4% after a global outage that included its Outlook and Teams products began to ease.

INFLATION CONCERNS REMAIN

On the economic front, the Labor Department said US producer prices were slightly cooler than expected in October, but still shot up 6.5% year over year, the largest annual gain since November 2022.

The data kept expectations for a rate hike of at least 25 basis points at the Fed's December meeting completely locked in, with markets pricing in a roughly 10% chance for an outsized 50-basis-point increase, according to CME FedWatch.

Comments from multiple Fed officials earlier this week suggested the US central bank was open to a more aggressive path of rate hikes as price pressures worsen.

The sentiment for additional rate hikes was echoed by more Fed officials on Friday, including San Francisco Federal Reserve President Mary Daly, who said her "bias" is that the central bank will need to increase its policy rate, while Boston Federal Reserve President Susan Collins said tighter monetary policy is coming because of high inflation.

Declining issues outnumbered advancers by a 1.42-to-1 ratio on the New York Stock Exchange and by a 1.78-to-1 ratio on the Nasdaq.

The S&P 500 posted 9 new 52-week highs and 1 new low, while the Nasdaq Composite recorded 28 new highs and 301 new lows.