Markets today: Nvidia gains wiped,
Despite Nvidia’s big numbers, concerns about a potential AI bubble have not gone away. The concern among investors is that all the dollars poured into AI chips and data centers won’t ultimately deliver the huge profits and productivity for the economy that advocates promise.
Yes, Nvidia expects to sell another $65 billion worth of chips in the next three months, which is more than analysts expected. So will all these chips actually create much bigger profits for Amazon and other companies that use them? The question remains whether all the investments in AI will be worth it in the end.
Bank of America’s latest survey of global fund managers showed a record percentage of investors say companies are “overinvested.”
Amazon fell 2.5 percent on Thursday from an early gain of 2.1 percent. Palantir Technologies fell from a 5.5 percent jump to a 5.8 percent loss.
The last time the broader stock market shook on a day as harsh as Thursday’s was in April, when President Donald Trump shocked the world with harsh “Emancipation Day” tariffs.
As for interest rates, the second concern plaguing Wall Street, the U.S. government’s employment report on Thursday came in mixed and offered some relief. Financial markets initially appeared to be parsing data for encouraging signals, according to Seema Shah, chief global strategist at Principal Asset Management.
The report showed hiring by U.S. employers was stronger in September than economists expected; This may indicate that the economy remains robust. But he also noted that the unemployment rate has worsened slightly, which could give the Fed reason to cut its key interest rate at its next meeting in December.
Traders still think a rate cut in December is relatively unlikely, giving it a roughly 40 percent chance, according to data from CME Group. But this is better than the 30 percent chance they saw the day before.
What the Fed does is critical for the stock market because prices have reached records in part due to expectations that interest rate cuts will continue. The Fed has already cut interest rates twice this year to support the slowing job market. But lower rates could worsen inflation, which remains stubbornly above the Fed’s 2 percent target.
Walmart was on Wall Street’s winning side, gaining 6.5 percent after the retailer delivered another remarkable quarter. It reported strong sales and profits that beat Wall Street expectations as it continues to make cash-strapped Americans nervous about the economy and prices.
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This wasn’t enough to offset Nvidia and technology’s losses. Companies in the crypto industry also fell as Bitcoin fell to its lowest price since April. Robinhood Markets fell 10.1 percent and Coinbase Global fell 7.4 percent.
In total, the S&P 500 fell 103.40 points to 6,538.76 points. The Dow Jones Industrial Average decreased by 386.51 points to 45,752.26 points, and the Nasdaq composite index decreased by 486.18 points to 22,078.05 points.
In the bond market, the yield on the 10-year Treasury note fell from 4.13 percent to 4.09 percent at the end of Wednesday.
Indices on stock markets abroad rose in most of Europe and Asia.
Japan’s Nikkei 225 index made two big gains, up 2.6 percent and South Korea’s Kospi index up 1.9 percent.
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The Market Summary newsletter is a summary of the day’s transactions. Let’s each take ittoday afternoon.
