Huang probe could delay Nvidia’s bets, analyst warns

US stocks fell Tuesday as Nvidia shares dropped 5.53% amid an investigation and inflation data fueled rate-hike fears. The Dow, S&P 500, and Nasdaq declined. US consumer prices rose 0.4% in October, exceeding expectations. European stocks mostly rose, with the Stoxx Europe 600 up 0.27%.

U.S. stock futures rose slightly after Wall Street's decline, driven by higher-than-expected CPI data and Nvidia's losses. S&P 500, Nasdaq, and Dow Jones indices fell 0.4%, 0.7%, and 0.3% respectively. Fed officials signaled potential rate hikes, with markets pricing in a 91% chance of a 25-basis-point increase in December. CoreWeave gained over 5% after reporting strong earnings.

Nvidia's stock dropped 4.3% Monday and 6% Tuesday after CEO Jensen Huang admitted to an affair and an independent investigation was announced. Despite Nvidia being a major holding in ETFs like VOO, QQQ, and SMH, these funds saw gains offsetting Nvidia's losses. Broadcom, a rival, rose 8.8% Monday and 3% Tuesday. The market's concentration did not lead to fragility, as gains in other stocks and sectors balanced out Nvidia's decline.

US President Trump reportedly knew about Nvidia CEO Jensen Huang's ties to a woman suspected of spying for China before a presidential visit to Beijing, contradicting his earlier statements. Nvidia has launched an independent probe and shares fell over 4% on Monday. According to the NYT, Trump was informed about the relationship at least twice before the trip.

NVIDIA and its CEO, Jensen Huang, are being sued by a shareholder who claims they misled investors about Huang's relationship with Alice Huang, a former Megaspeed executive suspected of espionage. The lawsuit seeks class action status for investors who bought shares between October 9 and November 8. NVIDIA had previously denied unusual connections with Megaspeed but later admitted to an affair and launched an investigation.

Microsoft briefly became the world's second-most valuable company, overtaking Nvidia amid a 6% share drop. Nvidia's CEO, Jensen Huang, is under scrutiny for a reported relationship with a Chinese businesswoman and potential foreign intelligence involvement. Nvidia's board launched an independent investigation, denying national security concerns. Microsoft shares dipped 0.4% to $543.25, while Nvidia traded at $167.11.