Nvidia suffers a historic crash, losing $278.9 billion in value in one day

Nvidia is going from record to record, but the one it broke this Tuesday is negative. The microprocessor giant, the star of artificial intelligence, suffered a historic crash with a drop of 9.5%. In absolute terms, this translated into the largest loss of market capitalization or stock market value by a company in a single day: 278.9 billion dollars (about 252.4 billion euros). It surpasses the record of Meta, which lost 232 billion dollars in a session on February 3, 2022, plummeting 26% after presenting its annual results.

With Tuesday’s fall, the world’s third-largest company by stock market value (behind only Apple and Microsoft) has accumulated a 14% drop in three sessions since it presented second-quarter results that disappointed the market despite multiplying its revenues and profits. Investors were not pleased with the third-quarter revenue forecast or the manufacturing problems of Blackwell, its most advanced processor, which is currently being launched.

Nvidia shares closed the session at $108 per share, far from the high of $140.76 reached a few months ago. At current prices, the company’s market capitalization has shrunk to $2.65 trillion.

Additionally, after the close of trading, Nvidia shares lost another 2% in after-hours trading, after Bloomberg reported that the US Department of Justice has sent subpoenas to the company and other firms seeking evidence that the chipmaker violated antitrust laws.

Nvidia’s post-Labor Day plunge spread to other technology stocks, especially those in the microprocessor sector, in a bearish day for the stock market. Wall Street suffered its biggest drop since early August. The Nasdaq 100 closed down 3.15% and the S&P 500 fell 2.12%. The Philadelphia semiconductor index plummeted 7.8%, mainly dragged down by Nvidia.

Waiting for the rate cut

The US economy is at a turning point, with mixed signals about its loss of steam, on the eve of the Federal Reserve lowering interest rates for the first time in four and a half years, since it reduced them to a level close to zero at the height of the pandemic in March 2020. The publication of weaker-than-expected data from the ISM manufacturing index, an index of industrial activity, increased uncertainty about the current situation.

Following the latest economic indicators and the sharp fall in the stock markets, futures quotes assign an implicit probability of 62% that the reduction will be 0.25 points, to the range of 5.00%-5.25%, and 38% that the step will be more aggressive, with a reduction of half a point, to 4.75%-5.00%. according to CME’s Fedwatch tool. On Monday, the odds were 70% to 30%.

The Federal Reserve meeting is scheduled for September 17 and 18, and until then some important data on the evolution of the labor market and prices are still to be known. Of these, perhaps the most important is the August employment report scheduled for this Friday, September 6. Analysts expect a recovery in the pace of job creation, up to some 164,000 jobs in the month, and a drop in the unemployment rate of one-tenth, to 4.2%, a scenario that would be compatible with a reduction of 0.25 points. Depending on how much the figures deviate from this forecast and in what direction, this may affect the amount of the cut.

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