The Wednesday U-Turn That's Still Going...

US equities sold off in response to BLS consumer inflation data for August on wednesday morning and sold off rather sharply. At least from the opening bell and over the hour or so that followed, it felt as if a severe sell-off might be in the works. Then, almost as if coordinated algorithmically, the entire aura around our beloved financial marketplace shifted. For a third consecutive trading session, US equities sold off out of the gate into mid-morning, and then rallied from that point over several hours into the closing bell. On Wednesday both the morning sell-off and the ensuing rally were more pronounced than either had been on Monday or Tuesday.

The Nasdaq Composite had been down as much as 1.4% for the session, only to close up 2.17%. That's not normal. The S&P 500 had been down 1.6% at the day's low and managed to close up 1.07% on Wednesday. This one will knock your socks off. The Philadelphia Semiconductor Index was down 1.4% at 10:52 ET on Wednesday and then steamrolled everything in its path on its way to close up a stunning 4.9%. Rock and Roll.

So how does a slightly warm to the touch monthly print for CPI provoke a sell-off that turns into an aggressive rally? That's not hard to figure out. They call him "The Fonz" for a reason and he spoke on Wednesday from the Goldman Sachs Communacopia & Technology Conference.

Of course, I write of Nvidia (NVDA) CEO Jensen Huang. Huang said exactly what portfolio managers, investors and traders wanted to hear on Wednesday and they reacted with fervor. Is it really that simple? In the era of electronic trade? You bet it is. All you need is a little love, or a little hate and voila! You have momentum and momentum breeds overshoot.

Huang

Speaking from the above-mentioned conference in San Francisco, Huang said, "Today's computing is not 'build a chip' and people can buy your chips, put it in a computer. That's really kind of 1990s. The way that computers are built today, if you look at our new Blackwell system, we design seven different types of chips to create the system. Blackwell is one of them."

There. He mentioned Blackwell. Why is Blackwell important? This architecture is the platform upon which Nvidia's next generation AI-capable chips are built. It was unveiled earlier this year, but there have been delays in production that have caused concern on Wall Street. Blackwell is key to Nvidia maintaining its lead in the AI space over key competitors such as Advanced Micro Devices (AMD) and key towards keeping large clients within the Nvidia ecosystem.

On that note, Huang added... "We are ramping Blackwell. And it's in full production. We'll ship in Q4 and scale it, start scaling in Q4 and into next year. The demand is so great, and everybody wants to be first."

Kaboom !! A sigh of relief was heard up and down Wall Street on those remarks. Investors and traders bought Nvidia stock, they bought the semiconductor space more broadly, and all tech more broadly than that. In fact, these comments turned the entire trajectory for the day for US equities.

Additionally, and unrelated, unnamed sources at the Saudi AI Summit, were reported by Semafor to have said that the US government was close to permitting high end chips designed by Nvidia to be exported to Saudi Arabia as that nation is working to meet US national security requirements.