SPY Dips as Nvidia Falls; Inverse Chip ETFs Surge

Stocks reversed course on Thursday afternoon, with major averages trading lower despite initial attempts to recoup Wednesday’s losses. 

The SPDR S&P 500 ETF Trust (SPY) fell 0.8%, weighed down by artificial intelligence firm Nvidia’s 6.4% drop following its latest earnings report. Nvidia-focused ETFs saw dramatic movement. 

Funds betting against the chip giant surged, with GraniteShares 2x Short NVDA Daily ETF (NVD) soaring 12.7% and Direxion Daily NVDA Bear 1X Shares (NVDD) climbing 6.3%. U.S. robotics and AI ETFs received a boost from Crowdstrike’s strong quarter. 

The cybersecurity company’s shares rose 2.8% after posting better-than-expected earnings and revenue, and despite lowering its full-year outlook due to last month’s global outage. The AI sectors resilience was reflected in the REX AI Equity Premium Income ETF (AIPI) and TrueShares Technology, AI & Deep Learning ETF (LRNZ), both gaining about 1%.

Stock ETFs jumped, despite market bellwether Nvidia Corp.'s stumble, as stronger-than-reported second-quarter economic growth numbers calmed recession worries and kept hopes for a soft landing alive.

The SPDR Dow Jones Industrial Average ETF Trust (DIA), a proxy for the Dow index, added 1% shortly after noon, reaching a fresh all-time intraday high. The Vanguard S&P 500 ETF (VOO), which tracks the broader S&P 500, added 0.9%. 

Investors were optimistic about the economy, despite a 3% drop in Nvidia stock after the AI chipmaker's results sparked worries about future growth. 

Second-quarter GDP growth was revised to 3% from a previously reported 2.8%, as the consumer spending figure was bumped to 2.9% growth from 2.3%, according to the U.S. Commerce Department.

Tech stocks, as measured by the Nasdaq-tracking Invesco QQQ Trust (QQQ) leaped, with QQQ adding 1.3%. The SPDR Gold Trust (GLD) moved 0.6% higher along with the 0.8% gain in the iShares Silver Trust (SLV). The United States Oil Fund LP (USO) added 1.2%.

Crypto ETFs reversed three-straight days of declines, as bitcoin's price retraced recent highs above $60,000 before dropping. The Grayscale Bitcoin Trust (GBTC) added 2.8% while the iShares Ethereum Trust (ETHA) rose 2.6%.