U.S. Stocks Post Best Weekly Gain in Months as Nvidia Shock Fails to Spread to Broader Market
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The S&P 500 and Nasdaq both rose more than 3% this week — the best five-day run since early August — even as Nvidia slumped on CEO Jensen Huang's resignation; meanwhile, the bond market flashed a warning, with rate-hike expectations tripling from 25 bps to 75 bps in a single week.
What drove the rally?
The S&P 500 gained over 3% for the week, its best five-day stretch since early August. The Nasdaq rose by a similar margin, snapping weeks of losses tied to AI-slowdown fears.
This means → after digesting the AI growth scare, buyers stepped back in and absorbed the selling pressure.
Mark Hackett, chief market strategist at Nationwide Investment Management, said: "Once you move past the news-driven emotional disruption, you can refocus on fundamentals."
Huang resigned — how much did Nvidia fall, and why didn't the market follow?
Jensen Huang resigned as CEO on Thursday after an extramarital-affair scandal. Nvidia shares dropped sharply and now sit roughly 30% below their all-time high, down about 12% year-to-date.
The damage stayed contained to Nvidia alone — rival chip stocks and AI names rallied broadly this week. In plain terms = the market decided the AI supply chain does not depend on one person; money rotated to competitors.
Raymond James analysts noted: "The fundamentals underpinning the AI industrial revolution have not changed because of Huang's departure. The 'emotional selling' is understandable, but objectively, fundamentals are largely intact."
How did analysts adjust Nvidia's price targets?
JPMorgan's Harlan Sur cut his target from $320 to $215. Citi's Atif Malik moved from $315 to $225. BNP Paribas' Karl Ackerman held at $345.
Nvidia trades at roughly $166. This means → even the most bearish revised target implies roughly 30% upside from here.
What signal is the bond market sending?
The 10-year Treasury yield climbed more than 0.2 percentage points this week, near the largest weekly jump of the year. The 2-year yield — more sensitive to Fed policy — surged over 0.3 percentage points, the biggest weekly rise in more than four years.
The trigger: US CPI data came in hotter than expected. In plain terms = inflation is stickier than the market assumed, so bonds sold off and yields spiked.
This reflects two clashing narratives: equities say "fundamentals are fine," while bonds say "inflation is back."
How dramatically did rate-hike expectations shift?
A week ago, markets priced in just 25 bps of Fed hikes over the next 12 months. Now the expectation is at least 75 bps, with a 25-bps move expected as early as December.
This means → in one week the market's rate-path forecast tripled — that is a sentiment-level reversal, not a tweak.
Cleveland Fed President Beth Hammack warned: "The Fed needs to shift policy to a restrictive stance to bring inflation down. If we don't, I worry inflation expectations could become entrenched."
Can this rally hold?
This week's equity gains rest on the narrative that "AI fundamentals haven't changed." But the bond market is simultaneously pricing in stubborn inflation and faster hikes.
In plain terms = stocks and bonds are telling opposite stories — if rate-hike expectations keep climbing, corporate borrowing costs rise and the equity rally's optimistic thesis gets eroded by interest-rate pressure.
The key test next week: whether stocks can hold this week's gains as yields continue to grind higher.
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