U.S. stocks experienced a dramatic fluctuation on Thursday, showcasing one of the most significant mood swings in recent months. The Nasdaq Composite closed down 2.16% after a promising start, where it peaked at a gain of 2.6% in the morning. Similarly, the S&P 500 ended the day 1.56% lower after hitting an intraday high of 1.9%. The Dow Jones Industrial Average also mirrored this volatility, ultimately closing down by 0.84% after climbing as much as 1.56%.
The turbulence was prominently influenced by Nvidia, the leading company in artificial intelligence (AI) chips. Nvidia’s shares initially surged by as much as 5% before experiencing a significant decline, ultimately finishing the session down 3.2%. Other AI-related stocks, including Oracle and AMD, exhibited comparable movements, indicating that initial reassurances from Nvidia’s CEO, Jensen Huang, regarding the sustainability of the AI boom were only temporarily comforting to investors. Concerns resurfaced swiftly, contributing to the downward trend.
Compounding the market’s instability was the U.S. jobs report for September, which presented results that were far better than expected, with 119,000 jobs added—well above the Dow Jones consensus estimate of 50,000. However, the unemployment rate also rose to 4.4% from 4.3%, marking the highest level in nearly four years. This data contributed to trepidation among investors regarding potential interest rate cuts, as traders adjusted their forecasts, increasing the likelihood that the U.S. Federal Reserve would hold rates steady through December.
As holiday optimism looms on the horizon, investors are grappling with heightened valuations and a less favorable outlook regarding monetary policy adjustments. While the potential for seasonal cheer remains, the timeline appears less optimistic than initially anticipated.
In related markets, Asia-Pacific shares mirrored the downturn seen in the U.S., with notable declines in major indexes following Wall Street’s lead. SoftBank’s shares fell by more than 10%, highlighting the widespread impact of the investor sentiment shift.
On the international front, Japan announced a substantial $135 billion stimulus package targeted at combating inflation, bolstering economic growth, and enhancing defense capabilities. This announcement came amid reports of rising core inflation, which hit a three-month high in October, and significantly better-than-expected export figures.
Meanwhile, Singapore’s Ministry of Trade and Industry revised its GDP growth forecast for 2025, now estimating an expansion of around 4%, up from the previous forecast range of 1.5% to 2.5%, citing resilient global economic conditions as the driving force behind this increase.
Lastly, in the U.K., activist investor Boaz Weinstein highlighted emerging opportunities within investment trusts, stating that valuation discrepancies present significant prospects, while concurrently cautioning against potential risks in the AI sector beyond just Nvidia’s performance. Analysts are increasingly concerned about the broader implications for companies that may be accumulating substantial debt to construct data centers.
