Few bright spots in Wednesday's tough market — why Nvidia stock is one of them

Breaking news from the markets: Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Stocks were lower on Wednesday, but well off their worst levels of the session. The big story of the day: The spike in oil prices after President Donald Trump declared the ceasefire agreement with Iran over.

West Texas Intermediate crude jumped to $74 per barrel from $70, while Brent climbed to around $78. It is anyone's guess as to how long these attacks will last, but the move in oil has a clear impact on the bond market. Treasury yields surged as traders boosted Federal Reserve interest rate hike expectations on worries that rising oil prices will keep inflation elevated.

Economic Details

The 10-year Treasury yield rose to roughly 4. 58%, putting it within striking distance of its May high. Higher energy prices and rates are a bad combination for cyclical stocks.

Materials, consumer discretionary, and financials were the three worst-performing sectors. Industrials also struggled. The best-acting group was AI stocks, which rebounded after sharp declines in three of the four prior trading sessions.

Nvidia shares traded higher after The Information reported that China plans to let a handful of AI companies buy a limited amount of H200 chips. Earlier this year, the U. government approved licenses for Nvidia's H200 chips to be shipped to Chinese customers.

Analyst Views

However, the AI chip company has yet to generate any revenue in the world's second-largest economy. What's stopping the sales is that the Chinese government has restricted imports of Nvidia chips due to security concerns. Is this the news we've been waiting for that finally gets Nvidia back into China — a market once estimated to be worth $50 billion annually?

This isn't the first time we have seen headlines like this, and previous reports never led to any meaningful change. In January, said China allowed ByteDance, Alibaba , and Tencent to buy Nvidia H200 chips, but nothing ever materialized. It would be different if Nvidia were to confirm the story, the orders, and the sales.

Until that happens, don't buy Nvidia banking on China revenue added back into management's guidance and analysts' long-term models. Buy it because the company's leadership in AI platforms isn't going away and the stock is cheap and trades at just 16. 5 times calendar year 2027 earnings per share (EPS) estimates, according to FactSet.

Economists are analysing what the news means for the markets.