Happy hump day! Apple stock hit a record high Tuesday the same day Nvidia dropped almost 5%.

The world’s most valuable company has yet to be dethroned, but unusual volatility from the runner-up could change that in an instant.

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Volatile as ever

Just one day separated Nvidia nearly stealing Apple’s crown as the most valuable company in the world and the stock shedding roughly $149 billion in market value. 

A swing like that is enough to make even the most grizzled traders nervous.

But for anyone familiar with Nvidia’s price action since ChatGPT launched in 2022, Tuesday’s 5% drop was just another day.

Most companies don’t see their valuations change by hundreds of billions of dollars in a single day.

Generally, the more a company grows, the less volatile its share price gets. 

Not true for Nvidia. 

Over the last decade, the stock’s volatility relative to the S&P 500 has doubled — even as its market cap has skyrocketed from about $10 billion to $3.24 trillion, according to DataTrek Research.

“In other words, the stock has only gotten more difficult to invest in than the broader US equity market even as it is now the S&P’s second largest holding,” said the firm’s co-founders Jessica Rabe and Nicholas Colas.

(The same, counterintuitive idea holds true for bitcoin.)

As Opening Bell Daily covered on October 3, the market has become less and less top-heavy in the second half of 2024.

One point that illustrates this is how the equal-weighted S&P 500 — which effectively gives every company the same say in index performance, regardless of size — outperformed the market-cap weighted version in the third quarter. 

That means Nvidia, as massive and volatile as it is, doesn’t move the market today as much as it did at the start of this year. 

Notably, since investors began rotating into small- and medium-sized stocks this summer and Big Tech lost some of its influence over the S&P 500, chip names have underperformed the benchmark.

To be clear, before its latest dip Nvidia had touched a record high on Monday to cap off a two-week winning streak.

It’s up roughly 180% year-to-date and CEO Jensen Huang maintains that customers can’t get enough of their chips.

Tuesday’s decline followed reports that the Biden administration is considering a cap on US chip exports to some Persian Gulf countries.

Meanwhile, the semiconductor supplier ASML reported weaker-than-expected earnings, which led to a 17.5% decline in the company’s share price.

None of the above, of course, changes that most of Wall Street remains bullish on Nvidia, volatility and all.

“NVDA is a case study in how a larger market cap does not mean a less volatile stock and shows what happens when a business scales its disruptive technology into an addressable market with potentially explosive new opportunities,” Rabe and Colas maintained.

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Elsewhere:

🏦 Big banks rebounded in Q3. Some of the biggest names on Wall Street including Goldman Sachs, Bank of America, and Citigroup have reported strong quarterly reports. The firms say clients are getting more comfortable issuing debt, pursuing mergers, and executing trades — all of which could stem from budding optimism for a soft landing. (Yahoo Finance)

📈Walgreens stock jumped 14.1%. Investors seemed to welcome the news that the pharmacy chain will close 1,200 stores over the next three years. Executives also announced that another 800 stores will be put under evaluation for closure, too. Tuesday marked the stock’s best day since 2008. (MarketWatch)

👀 Trump wants to win over business leaders. In an interview with Bloomberg, the presidential candidate said his policies would inspire growth despite adding to government debt, defended his proposals to increase tariffs on foreign goods, and mocked the job of running the Federal Reserve. (Bloomberg)

Rapid-fire:

• Apple stock hit a record high as investors grow bullish on AI-powered iPhones (Bloomberg)

• Bitcoin nearly hit $68,000 Tuesday before falling sharply (CoinDesk)

• Americans are increasingly underwater on their car loans (CNBC)

• The World Bank voted to change its internal guidelines to boost lending capacity by $30 billion over the next decade (Reuters)

• Global government borrowing is set to top $100 trillion with no sign of slowing (Business Insider)

• Goldman Sachs equities trading posted an 18% increase in revenue to $3.5 billion, over half a billion higher than forecast (CNBC)

• Trading for Trump Media stock was halted late Tuesday before the price suddenly plunged (CNBC)

Election odds according to Kalshi, the biggest US prediction market:

Last thing:

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