Going Over Nvidia’s Most Recent Stock Drop

This past Thursday saw a decrease in value for the Nasdaq index, which affected every listed company. In response, investors prepared themselves to see these companies drop similarly. Better not get caught unaware in a time like this.

However, Nvidia (NASDAQ:NVDA) investors got an entirely different deal out of this. Despite being part of Nasdaq, the company dropped 4.4% in a single day. That’s almost double the original amount!

As always, this leaves some questions to be answered. For instance, what happened?

It’s All Because of the Feds

Over the last couple of months, the Federal Reserve (or Fed, for short) has been part of a bond-buying program. As simple as it might sound, this initiative has effectively kick-started many growth stocks.

Sadly, monetary inflation had a say in the matter as well. Relatively recently, inflation numbers have been somewhat harsher than what we’re used to. In little to no time, Fed Chairman Jerome Powell had to make an announcement.

To counter these inflationary pressures, the bond-buying program is to cease all activities, with this change taking place months before the program’s original closing date. 

Remember, the Nasdaq is built out of growth stocks. So it is easy to understand how this change was an essential part of the index’s drop.

To simply put it. Investors are scared that growth stocks won’t be financially feasible anymore. And that seems to apply with Nvidia harder than it does to any other growth stock.

Given that this is an unprecedented turn of events, we can’t honestly say if these fears are without reason. For those reasons, we recommend keeping a close eye on the situation.