Fed's Waller Floats Half-Point Hike as Nvidia Woes Shake AI Trade

A Federal Reserve official has put a half-percentage-point rate hike on the table, and that threat matters more to markets right now than anything happening at Nvidia. Federal Reserve governor Christopher Waller raised the possibility of a 50-basis-point move if October's CPI report comes in hotter than expected, according to MarketWatch's Need to Know column. The 10-year Treasury yield jumped on his comments, and gold prices slipped.

The remarks land on a morning when Wall Street is already juggling two stories at once: the inflation print due Tuesday and earnings after the closing bell from CoreWeave, the poster child for the debt-fueled AI boom. After three swings of more than 1,000 points for the Dow industrials in four sessions, markets appeared headed for a quieter open Tuesday.

What happened to Nvidia?

Nvidia's stock sank Monday even as the broader market staged a remarkable rally. Investors appeared to be factoring in uncertainty about CEO Jensen Huang's future while betting the rest of the AI trade could thrive despite Nvidia's troubles, MarketWatch reports.

Nvidia says Huang isn't going anywhere. But the investigation has put a spotlight on a succession problem that investors would probably rather not think about right now, as editor in chief Mark DeCambre frames it. Some concern about Huang and Nvidia's China dealings had surfaced earlier. The more pressing question: what would Nvidia look like without the black-leather-jacketed man emblematic of its stratospheric rise?

DeCambre calls this key-person risk. "When my kids call out, 'Dad!' it's usually to ask one question: 'Where's Mom?'" he writes. "When my wife travels, screen time hits all-time highs, healthy eating habits plunge, and hygiene becomes suspect."

The China angle runs deeper than one company. Months before the scandal surrounding Huang erupted, a short seller was raising questions about Nvidia's China business and its CEO's ties to a major chip buyer. He's now telling MarketWatch's Joseph Adinolfi that he has spotted similar warning signs involving other companies.

What does the inflation report change?

Here's the practical question for practitioners: Wall Street seems willing to look past one kind of uncertainty, but a fresh flare-up of inflation might be harder to dismiss. Nvidia's troubles are idiosyncratic; a hot CPI print repriced every asset on the board, as Tuesday's yield move already shows.

Not everyone is running for cover, though. Yardeni Research, citing strong earnings prospects despite the recent bout of volatility, makes the case that the selloff in semiconductors presents a buying opportunity.

The AI valuation question is getting its own stress test. Anthropic's reported IPO filing snafu comes as investors are already reconsidering just how much AI companies are reasonably worth, MarketWatch notes.

Elsewhere on the tape

• New details from a failed heart-drug trial are raising questions for Amgen and Eli Lilly, whose experimental treatments target the same cardiovascular risk factor.
• Gas prices have slipped below $4 a gallon, but MarketWatch's Myra Saefong explains why this year's travel-intensive Thanksgiving holiday could yet set a dubious record at the pump.

The through-line for Tuesday: markets absorbed the Nvidia shock in a single session. A hot inflation number, with a Fed governor openly discussing a half-point hike, is the risk that wouldn't wash out so easily.