US stocks ended lower Friday as technology shares came under pressure, with the Nasdaq Composite down 0.9% and the S&P 500 off 0.4%. The Dow Jones Industrial Average edged up 0.1%. Despite the pullback, all three major indexes posted solid gains for the week. Producer-price data renewed concerns about persistent inflation, while Nvidia’s earnings and Anthropic’s planned listing are set to draw attention next week.
Annual producer-price inflation reaches its highest since 2022
The US Bureau of Labor Statistics said the Producer Price Index (PPI) rose 0.3% in October from the previous month, below economists’ 0.4% forecast. Year over year, however, PPI increased 6.5%, its highest rate since November 2022. Core PPI, which excludes food and energy, also rose 0.3% month over month, in line with expectations. Its annual increase of 5% was the highest since January 2023.
Chris Osmond, chief investment officer at Fifth Third Wealth Advisors, said producer inflation had cooled from September, but not enough to deliver the degree of interest-rate relief markets had hoped for. Energy prices fell in October, while food, services, and transportation and warehousing costs rose. That pattern suggests price pressures are spreading beyond energy, Osmond said, making it harder for the Federal Reserve to treat rising inflation as temporary if it continues.
After the data, interest-rate futures showed a higher probability of a Fed rate increase in December. CME FedWatch data put the chance of a 25-basis-point hike at 90%, up from 85% the previous day.
Nvidia falls 2% ahead of earnings and leadership handover
Nvidia dropped 2% Friday, extending its losses for the week. Founder Jensen Huang resigned as chief executive and board member on Thursday after an extramarital relationship with a direct report came to light. The board had previously investigated Huang’s relationship with an executive at a Singapore-based cloud computing company. US officials have identified the executive as a Chinese spy.
The leadership change comes just ahead of Nvidia’s quarterly results, due after the market close next Tuesday. Interim CEO and CFO Colette Kress will face investor questions about the company’s performance and transition in leadership.
Cullen Rogers, chief investment officer at Wedbush Fund Advisers and portfolio manager of the Dan IVES Wedbush AI Revolution ETF, said the AI industry does not depend on any one person. But Nvidia will need to show it can continue executing its strategy after its founder’s departure. He said next week’s earnings call will be the first major opportunity for the market to assess the company’s position.
Chipmakers retreat as Cisco falls despite upbeat results
Friday’s technology sell-off spread across several sectors. José Torres, senior economist at Interactive Brokers, said investors were concerned that the situation around Nvidia could lead to tighter regulation and oversight, with potential implications for semiconductor companies’ revenue and earnings prospects.
Among S&P 500 constituents, Advanced Micro Devices fell 8.8%, the index’s biggest decline. Broadcom lost 4.8% and Intel slipped 2.5%. Cisco Systems dropped 6.2% despite reporting quarterly results above expectations and raising its outlook. The shares had performed strongly this year, and Friday’s decline may reflect some investors taking profits.
Morgan Stanley analyst Meta Marshall said Cisco’s October-quarter results eased some concerns that demand had been pulled forward. The increase to earnings-per-share estimates was also larger, reflecting improved operating-expense efficiency. Marshall remains positive on the company’s multi-year growth prospects but kept an Equal-weight rating, noting that the shares’ recent rise has reduced the scope for further gains.
Anthropic targets Nasdaq debut next week
AI company Anthropic is expected to set the price for its initial public offering on Wednesday evening next week, with trading on Nasdaq scheduled to begin Thursday under the ticker “ANT.” The preliminary offering plan announced this week calls for 825 million shares priced at $70 to $78 each.
Reported orders for the offering are said to be about six times the number of shares available. If demand remains strong, Anthropic may have more room to set the final price toward the upper end of its range. Trading dynamics after the listing could also contribute to share-price volatility. Investors will be watching both the major AI company’s debut and Nvidia’s first quarterly results since Huang’s departure.