Traders witnessed a turbulent trading day on the New York Stock Exchange as markets reacted to a pronounced sell-off in artificial intelligence stocks. By Thursday evening, stock futures showed slight promise, with futures linked to the Dow Jones Industrial Average climbing 136 points, equating to a 0.3% increase. Meanwhile, S&P futures also rose by 0.3%, and Nasdaq 100 futures recorded a modest gain of 0.2%.
During the day’s trading, technology stocks experienced a sharp reversal. Earlier in the session, strong third-quarter earnings and optimistic guidance from Nvidia had propelled the Dow Jones Industrial Average upward by nearly 718 points, aiding the S&P 500 to achieve a notable rise of 1.9%. However, this rally failed to sustain itself amid a broader stock market downturn. Nvidia’s stock ultimately closed down approximately 3.2%, positioning it for a substantial decline of 10.8% for November, marking its most significant monthly drop since March.
As trading concluded, the Dow lost about 386 points, translating to a 0.8% decrease. The S&P 500 ended the day 1.6% lower, while the Nasdaq Composite saw a decline of nearly 2.2%. Compounding market stress was the release of job data reflecting stronger-than-expected job growth for September. However, the unexpectedly low unemployment rate highlighted inconsistencies in the U.S. labor market, contributing to reduced expectations for a Federal Reserve rate cut in December. Current market sentiment prices the chances of a quarter-point rate cut at about 40%, according to the CME FedWatch Tool.
Mark Luschini, chief investment strategist at Janney Montgomery Scott, noted that the corrective trend in the stock market, which began in late October, has not reached a complete conclusion. He suggested that although market conditions are showing signs of being oversold, further economic data to be released this week could influence whether a bounce occurs or if a deeper pullback is necessary to attract buyers.
Currently, major U.S. indexes are on track for a losing week, following profit-taking from previously high-performing stocks. The S&P 500 is down 2.9% week-to-date, and the Dow has seen a nearly 3% decline, while the Nasdaq has dipped by 3.6%. Some investors regard Thursday’s dip as a typical pullback following substantial gains earlier in the year. Ryan Detrick, chief market strategist at Carson Group, highlighted that the market sentiment had become excessively optimistic earlier in the month. The recent pullback can be seen as a necessary adjustment to eliminate weaker investors, reflecting growing levels of fear and apprehension.
