A significant shift occurred in the U.S. stock market on Thursday, driven by a reassessment of Nvidia’s earnings report and the implications of the September jobs report. The tech-focused Nasdaq Composite index sold off after an early rally, ultimately ending the day down 0.9%. Earlier in the session, the index had surged approximately 2.5%. Similarly, the S&P 500 experienced a reversal, closing down around 0.7% after an early increase of about 1.8%. The Dow Jones Industrial Average, which is less affected by tech stocks, fell by 0.5%.
Nvidia’s stock initially climbed by nearly 5% following its significant earnings beat and a robust fourth-quarter revenue forecast. CEO Jensen Huang indicated that demand for the company’s Blackwell processors is “off the charts,” which alleviated some investor concerns over a potential slowdown in AI-related stocks. However, this initial enthusiasm soon faded, and the stock turned negative.
The September jobs report released by the Bureau of Labor Statistics revealed that the U.S. economy added 119,000 jobs, surpassing expectations of just 51,000, although the unemployment rate increased to 4.4%, up from 4.3% in August. This duality in the jobs data led to mixed sentiments among investors, particularly regarding future interest rate decisions by the Federal Reserve. Following the news, options traders began pricing in roughly 38% odds of a rate cut at the Fed’s next meeting in December, an increase from prior estimates but still indicative of uncertainty regarding the Fed’s trajectory.
This report marked the first substantial economic insight since the conclusion of the longest-ever U.S. government shutdown. According to recent minutes from the Fed’s October meeting, policymakers are divided on whether the risk lies with a cooling labor market or persistent inflation.
In the earnings arena, Walmart reported stronger-than-expected profit and sales for its third quarter, prompting the retailer to raise its full-year forecasts. Despite some initial volatility, Walmart’s shares were boosted as investors analyzed the implications for consumer strength heading into the holiday season.
As the trading session progressed, major indices recalibrated after earlier highs. The Nasdaq and S&P 500 had seen gains of approximately 0.6% in late morning trading after substantial early jumps. Bitcoin stabilized around $90,500 per token after falling below $90,000 in previous sessions, amidst increased speculation about potential rate cuts following the jobs report. The overall cryptocurrency market saw mixed results, with Ethereum and BNB declining nearly 2%, while Solana experienced a 2.5% increase.
The positive sentiment around Nvidia’s earnings also rippled through the chip manufacturing sector, with notable gains in shares from Broadcom and AMD, both rising around 4% shortly after the market opened. Other notable tech stocks like Google and Meta saw gains of approximately 3% and 2%, respectively. Tesla advanced nearly 6%, capitalizing on its aspirations for AI integration in its products.
The September jobs report indicated an unexpected rise in unemployment, compelling the markets to reassess growth indicators. Although hiring expanded more than anticipated, the uptick in unemployment raised concerns among investors. Options traders raised bets on the Federal Reserve cutting interest rates, driven by the contrasting data on employment.
Globally, tech stocks in Asia reacted positively to Nvidia’s performance, alleviating fears regarding an AI bubble. Shares of companies like Taiwan’s TSMC and South Korea’s SK Hynix experienced significant increases, while Japan’s Nikkei index gained over 2.6%.
Overall, the market’s abrupt retracement on Thursday underscores the intricate interplay between strong corporate earnings, economic data, and the ongoing uncertainties regarding monetary policy. Investors are left reassessing the implications of these developments as they navigate the future landscape of the U.S. economy and financial markets.
