Nvidia's stock market dominance fuels big swings in the S&P 500
Repeats with no changes
By Saqib Iqbal Ahmed
NEW YORK, Sept 13 (Reuters) - Nvidia's NVDA.O huge stock rally is still exertingan outsized influence over the S&P 500 index.SPX, reinforcing concerns that broader markets could be hurt if the chipmaking giant's fortunes turn.
This year's140% surge in shares of Nvidia, whose chips are seen as the gold standard in artificial intelligence applications, has accounted for about a quarter of the S&P 500's 17% gain.
Nvidia showed its powerful hold over Wall Street on Wednesday, when the stock's8.2% rally helped drive the S&P 500 to its biggest intraday upswing in nearlytwo years. The index reversed a 1.6% loss to end the day up 1.1%.
Nvidia jumpedafter CEO Jensen Huang flagged strong demand for the company'schips, boosting its market value by more than $200 billion and accounting for 44% of the S&P 500's surge that day, data from Nomura showed.
Nvidia's rally "got the whole market moving," said Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group.
The S&P 500 has struggled to makeheadway this year on Nvidia's down days, eking out gains only 13% of the time when the chipmaker's shares have closed weaker, a Reuters analysis showed.
This year,the index has failed to rise more than 1% on any day when Nvidia's shares ended lower. In 2020,there were 13 such instances.
For many investors, the recent moves revived worries over a small cohort of stocks dictatingthe market's direction.
Microsoft, Apple and Nvidia have a combined weighting of nearly 20% in the S&P 500, though shares of the first two have gained far less this year than Nvidia's.
While recent strength in non-tech sectors has stirred hopes of a broadening rally, a sustained sell-off in any of the tech megacapscould still badly hurt broader markets, analystssaid.
"If Nvidia is weak because demand for their product goes down then that's going to tank the whole market," said Susquehanna's Murphy.
OPTIONS BOOST
Traders are keeping a close eye on Nvidia's options, which have played a major role in boosting recent moves.
Nvidia recently accounted for about 22% of the overall volume of individual stock options traded daily, up from around 5% at the start of the year, making it the most actively traded stock in the options market on most days, Trade Alert data showed.
Nvidia's gains areamplified when traders rush into upside call options. When buying of these options surges, market makers who sell these contracts are on the hook to buy anddeliver more Nvidiashares at the agreed price, leaving them "short gamma," in options parlance.
The additional purchases to coverrisk lift the stock even higher.
"You do see the market keen to buy upside calls when it's working," said Chris Weston, head of research at online broker Pepperstone. "When it's hot, these flows absolutely make a difference."
Nvidia is not the first stock to have sucha powerful sway overthe rest of the market.
Tesla, another favorite of nonprofessional traders, displayed similar characteristics a few years ago when the options market amplified the electric vehicle maker's stock swings, Nomura strategist Charlie McElligott said.
But AI seems to have stirred the imagination of investors even more than EVs.
"The mania that is the actual paradigm shift which AI represents across the corporate landscape, is just making it a magnitudes-larger theme," he said. "Tesla was never close to that."
"AI is just its own animal," McElligott said.
Nvidia's stock market dominance https://tmsnrt.rs/3B6etWr
Nvidia options boom https://reut.rs/3zuhuiG
Nvidia: Punching above its weight https://reut.rs/4d0yn2t
Reporting by Saqib Iqbal Ahmed; Editing by Ira Iosebashvili and Richard Chang
免責聲明: XM Group提供線上交易平台的登入和執行服務，允許個人查看和/或使用網站所提供的內容，但不進行任何更改或擴展其服務和訪問權限，並受以下條款與條例約束：（i）條款與條例；（ii）風險提示；（iii）完全免責聲明。網站內部所提供的所有資訊，僅限於一般資訊用途。請注意，我們所有的線上交易平台內容並不構成，也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
所有缐上交易平台所發佈的資料，僅適用於教育/資訊類用途，不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議，或是交易價格紀錄，或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。
本網站的所有XM和第三方所提供的内容，包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接，皆爲‘按原狀’，並作爲一般市場評論所提供，而非投資建議。請理解和接受，所有被歸類為投資研究範圍的相關内容，並非爲了促進投資研究獨立性，而根據法律要求所編寫，而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊，相關詳情請點擊 這裡查看。
