US Open: Wall Street tries to recover as Nvidia and Fed uncertainty weigh on sentiment

The final trading session of the week is bringing a slight improvement in sentiment on Wall Street, with major indices opening modestly higher. After several challenging sessions, some investors are returning to the market, although it is still too early to call this a decisive rebound. Attention remains focused on the turmoil surrounding Nvidia and the prospect of further Federal Reserve interest rate hikes.

Nvidia has come under pressure following reports of a personal scandal and the departure of Jensen Huang, the company's founder, who had led the business since its inception. Huang is closely associated with Nvidia's history and its transformation into one of the most important players in the semiconductor and AI industries. News of his departure has weighed on the company's share price and broader sentiment across the technology sector. Friday's session, however, is bringing an attempt at a recovery.

Friday's producer inflation data came in slightly better than expected. The Producer Price Index (PPI) rose by 0.3% month over month in October, compared with expectations of 0.4%. However, this does not necessarily indicate a meaningful easing in price pressures. Annual PPI inflation accelerated to 6.5%, its highest level in four years, while September's reading was revised upwards to 1.4%. The monthly figure therefore offers some relief, but the broader inflation picture remains concerning.

Expectations surrounding the Federal Reserve remain firmly hawkish. Comments from central bank officials, including New York Fed President John Williams, suggest that further action may still be needed to bring inflation under control. Williams highlighted persistent price pressures and the need to maintain monetary policy at an appropriate level. Markets are currently pricing in nearly a 90% probability of another rate hike in December. Even the slightly better-than-expected PPI reading has therefore done little to materially change expectations for the Fed's next decision.

Monetary policy could prove to be the biggest obstacle to further gains. The prospect of another rate increase means higher financing costs and less room for valuation expansion, particularly among technology companies. Friday's rebound provides a more positive finish to the week, but with expectations for the Fed's December decision remaining so hawkish, Wall Street may struggle to regain significant upward momentum in the near term.

Source: XTB Research

Futures on the S&P 500 (US500) remain under slight pressure during Friday's trading, although they continue to trade close to all-time highs. Sentiment on Wall Street is being weighed down primarily by uncertainty surrounding Nvidia following Jensen Huang's departure, alongside growing concerns about another Federal Reserve rate hike in December. While October's producer inflation reading came in slightly below expectations, annual PPI accelerated to 6.5%, reinforcing hawkish expectations for the US central bank.

Source: XTB Research

Corporate News:

Nvidia (NVDA.US) is attempting to recover after a sharp sell-off triggered by Jensen Huang's departure as CEO and co-founder of the company. Shares fell more than 4% on Thursday, although losses briefly reached double-digit territory during the session, while CFO Colette Kress took over as interim CEO. Investors are now assessing whether the leadership change could affect Nvidia's existing growth strategy and its position in the AI industry. Additional uncertainty comes from the upcoming quarterly earnings release and questions surrounding Nvidia's potential $10 billion investment in Anthropic.

Cerebras Systems (CBRS.US) reported record third-quarter 2026 results, highlighting the rapidly growing demand for alternative AI infrastructure solutions. Revenue increased by 70% year over year to $230.9 million, with the cloud services segment delivering particularly strong growth, rising 272% to $144.9 million. The company also raised its full-year revenue guidance to $940–960 million and expects fourth-quarter revenue to reach $310–330 million. Further growth is supported by new agreements with major cloud providers, including Microsoft, as well as a partnership with Oracle.

Microsoft (MSFT.US) came under pressure following a major Microsoft 365 outage that began on Thursday and continued for several hours, affecting users worldwide. The incident has once again raised questions about the reliability of the company's cloud services and the risks associated with large organisations relying heavily on a single technology provider.

Applied Materials (AMAT.US) delivered very strong fourth-quarter fiscal results, with its outlook for the coming period providing an additional positive signal for investors. Revenue increased by 53% year over year to a record $10.41 billion, while adjusted earnings per share came in at $4.16, above expectations of $4.05. Semiconductor Systems revenue was particularly strong, rising by 64%, highlighting how robust demand for AI infrastructure is driving investment among chip manufacturers. The company currently forecasts approximately $11.1 billion in revenue for the next quarter, above analyst consensus, and expects another record year in 2027.

SpaceX (SPCX.US) and Tesla (TSLA.US) are moving closer to a potential merger that could bring Elon Musk's space, automotive, robotics and AI ventures under one corporate structure. According to reports, discussions between the companies are progressing, with an agreement potentially being announced as early as December, although a decision could also be pushed back to early 2027. Key outstanding issues include valuation, corporate governance and potential regulatory hurdles, particularly given SpaceX's defence contracts and Tesla's significant presence in the Chinese market.