Cramer links Nvidia’s 4.6% stock decline to hawkish Fed signals
Nvidia shares lost 4.6% on Friday and closed at $217.55 after an intraday high of $229.26. CNBC columnist Jim Cramer believes the sell-off coincided with hawkish signals from the US Federal Reserve regarding a possible increase in interest rates.
After Nvidia released its quarterly report on Wednesday, its shares rose nearly 9% on Thursday. According to Cramer, Friday’s decline erased more than half of that gain. He stressed that, in his view, the drop was not related to weak fundamentals, as the company reported strong quarterly results.
Assessment of the Fed’s impact
Cramer noted that the stock sell-off coincided with the first speech by Fed Chair Kevin Warsh at the central bank’s annual symposium in Jackson Hole. Warsh said rates may need to be raised to contain inflationary pressure if current trends do not improve.
More current news is available on the UA.News Telegram channel Telegram.
According to CME Group’s FedWatch tool, market estimates of the probability of a rate increase at the Fed’s September meeting rose significantly after these statements. The Fed’s benchmark rate affects borrowing costs in the US economy, so an increase may affect rates on other types of debt.
Data center financing
In Cramer’s view, Nvidia’s sensitivity to monetary policy has increased because of the importance of borrowing for building data centers as part of artificial intelligence development. He believes that tighter Fed policy could complicate financing for new projects in this area.
Cramer also noted that Nvidia shares are trading at about 14 times projected earnings for fiscal year 2028, while the company has just reported results for the second quarter of fiscal year 2027. In his view, the shares’ further performance will depend not only on Nvidia’s results, but also on the bond market, inflation, and energy prices.
