Nvidia stock rises at start of Tuesday as Dow Jones inclusion looms

• Nvidia continues climbing following announcement of Dow Jones index inclusion.
• Nvidia will replace Intel on Friday, November 8.
• The stock market should be somewhat volatile this week as the US presidential election takes place on Tuesday.
• Sherwin-Williams is also replacing Dow, the chemical company, in the DJIA.

 

Nvidia (NVDA) stock is up at the start of trading on Tuesday once again. Nvidia made gains on Monday after S&P Dow Jones announced over the weekend that it would be replacing legacy chipmaker Intel (INTC) with Nvidia in the Dow Jones Industrial Average (DJIA) on Friday, November 8.

Nvidia stock gained 2% on Monday, while Intel stock sold off 2.9%. Both stocks are little changed in Tuesday’s premarket.

Additionally, paint producer Sherwin-Williams (SHW) shot up 4.6% on Monday following the announcement that it will be substituted for chemical firm Dow (DOW) in the Dow Jones index. The Dow Jones lost 0.6% on Monday, somewhat worse than either the NASDAQ and S&P 500, which both ended the session lower. But the Dow Jones rose at the start of Tuesday's session.

• Read more about how the US presidential election will affect markets.

Nvidia stock news

Intel and Dow were two of the three lowest-weighted members of the Dow Jones index. Intel has a market cap of $97 billion, and Dow has a market cap of $33 billion. In their place will be Nvidia, one of the largest US stocks at $3.3 trillion, and Sherwin-Williams at $94 billion. Nvidia ranked #1 last week when it beat out Apple (AAPL) for the top spot.

Nvidia will undoubtedly make the Dow Jones more attractive to investors, but most know that they can get a heavier weighting in Nvidia by investing in either the NASDAQ or the S&P 500. Intel comprised less than 1% of the Dow index this year. Still, Nvidia’s inclusion probably supplies the index with more upside opportunity. Nvidia is very much still a growth stock, whereas many Dow components are considered blue chips or value stocks.

Nvidia will bring the index further exposure to artificial intelligence (AI) as it is the primary designer of the most sought-after chips used for AI workloads. However, Dow investors already have some exposure via Microsoft (MSFT) and Amazon (AMZN).

Nvidia is said to be considering investing in a new AI startup this week. This one, xAI, is owned by none other than Mr. Tesla himself, Elon Musk. For his part, Musk is discussing a new funding round with investors that could value xAI between $45 and $75 billion. Nvidia has many such investments in AI startups, which use their startup funding to buy Nvidia chips. 

Other investors are focused on the fallout from Super Micro Computer (SMCI) losing its auditor last week. Super Micro is a company that builds water-cooled servers using Nvidia GPUs. As such, it is one of the largest consumers of Nvidia chips. The Ernst & Young accounting firm resigned from its contract with the server maker, citing lack of honesty from management in its attempt to finish filing its annual 10-K report with the Securities & Exchange Commission (SEC). 

In August, after short seller Hindenburg Research published a report purporting to show accounting malfeasance, Super Micro immediately said it would delay its 10-K. Now the Justice Department has gotten involved.

Nvidia said that it is rerouting orders scheduled for Super Micro to other buyers as the latter is now in danger of being delisted due to its failure to issue a 10-K.

Nvidia stock chart

Nvidia stock will likely face the same volatility this week as the rest of the market as the US presidential vote is underway on Tuesday, November 5. Wall Street has appeared to be anticipating a win by Donald Trump, based on the pronouncements of several high-ranking bankers and hedge fund titans. However, betting markets that were greatly in favor of Trump in recent weeks have moved sharply toward even since this past weekend, which benefits Vice President Kamala Harris.

A final poll of Iowa, which is not considered a swing state, showed Harris up by three percentage points this weekend. Most would like to disregard the poll since it does not align with most other polls, but it comes from Ann Selzer, who is considered by many to be the most accurate pollster in the US. If the poll is correct, it would mean that most swing states likely fall to Harris, the Democrat. With Wall Street positioned for a Trump win, a Harris win might provoke a market sell-off. 

• For more on the US presidential election, click here.

As it is, the Nvidia chart shows that NVDA stock is nearing its June 20 high at $140.76. Above there is further resistance from late October near $144. Technically, the all-time high for Nvidia is $144.42 from October 22.

Nvidia is clearly in an uptrend, and that uptrend won't end until shares dive below the 50-day and 100-day Simple Moving Averages (SMA) that now sit in the mid-$120s. However, support can likely be found in that same region between $120 and $125.

NVDA daily stock chart