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(Bloomberg) -- On Wall Street, all eyes are on Nvidia Corp.’s stock as chart-watchers search for signs the chipmaking giant will resume a rally, given its power to sway the broader market.
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Shares recouped some of the week’s losses, rising as much as 2.6% in Friday trading. Revelations that DeepSeek’s AI model could rival those of OpenAI and Meta Platforms Inc. and was made on less expensive, older Nvidia chips had spurred the largest one-day rout in US stock-market history on Monday.
The stock now lingers some 15% below its record high hit last year, hovering near its 200-day moving average — a critical measure of a stock’s momentum to technical analysts. Nvidia stock rebounded enough to close above the level for the past three trading days after dropping below that key benchmark Monday.
Traders are hoping it’s a sign that Nvidia will shake off the DeepSeek selloff and make another run to all-time highs. The 200-day moving average is viewed as a key support, or resistance, depending on what side of it shares ultimately end up on. Breaking - and staying - above the level could be a bullish signal that there’s further upside for shares. On the flip side, falling below the level could mean that there’s further downside ahead.
“It took a little punch in the nose there,” said Rich Ross, Evercore ISI’s head of technical analysis, referring to Nvidia’s Monday drop. “But it’s really brushed that off and stabilized over the past four days, so I think it’s quite encouraging, not to minimize the losses that we incurred on Monday, but only to put forth that the trend is still intact.”
Sea Change
The implications stretch beyond individual Nvidia shareholders. Given the company’s weight in the S&P 500 Index, its direction has outsized influence on the overall direction of the broader market. Though Nvidia was unseated as the top company in the world by market value — the spot once again belongs to Apple — it’s still the third largest in the S&P 500 and has a nearly 6% weight in the gauge.
“It’s pretty bullish that here we are with the S&P back at 6100, given the sharp decline in not just the biggest stock but really perhaps the most important just in terms of capturing that kind of zeitgeist in terms of AI and the themes that have driven this bull market,” Ross said.