What on Earth just happened to the stock market?

A day after Thursday’s alarming fake breakout, Friday turned into Atonement Day on Wall Street.

The Dow index closed the day with a gain of 493 points, or 1.08%, after rising as high as 800 points earlier in the day. While S&P 500 completed the day with a 0.98% increase, Nasdaq completed the day with a 0.88% increase.

The earlier rebound came after New York Federal Reserve President John Williams said he supported lowering short-term interest rates, giving investors hope that interest rates could rise Interest rate cut in DecemberFinally.

Friday’s gains capped a topsy-turvy and extremely confusing week for markets.

Heading into Thursday, there were two big questions the flagging stock market wanted answered: Is the AI ​​bubble about to burst and will the Fed cut interest rates in December?

At first, it seemed that investors were finally getting the clear answer they had been eagerly awaiting:

• Nvidia reports super strong earnings On Wednesday evening, initial fears that demand for AI was dwindling were eased.

• And on Thursday morning business report It showed the unemployment rate rose unexpectedly and the U.S. economy lost jobs for the second time in three months in August. The market believes the Fed may be forced to cut interest rates next month to provide the necessary support to the labor market.

Wow. Right?

Wrong.

At first the traders Thursday morning I was cheerfulIt sent all three major stock indexes sharply higher. At one point the Dow rose more than 700 points. However, later in the morning the impact of the rise began to fade, and by lunchtime confidence and markets had turned sharply negative.

Investors realized that the answers they thought they were getting actually raised new, more difficult questions.

“People are trying to figure out what’s better out of the box about A.) Nvidia could say realizing there’s no reward from these levels and B.) how the Fed could cut if the employment numbers are actually better,” said Michael Block, market strategist at Third Seven Capital.

By the end of Thursday, it was as if nothing had changed: Markets continued their decline, which left the S&P 500 down more than 5% from the all-time high it reached before Halloween.

• The Dow fell nearly 400 points by the end of Thursday, with a 1,100-point swing — the largest swing since the tariff-fueled turmoil in April.

• The S&P 500 lost 1.6 percent and the Nasdaq lost more than 2 percent.

• Nvidia (NVDAThe index, which gained up to 5 percent in the early hours of the day, closed with a decrease of 3 percent.

• Bitcoin, which initially rose above $92,000, approached $86,000 late Thursday.

Markets rebounded on Friday, but Nvidia was essentially flat. bitcoin It fell nearly 2%, falling to levels not seen since April and marking its worst month since 2022.

Nvidia’s quarterly earnings were so high that investors began to fear that the world’s most valuable company and maker of the most valuable commodity in technology (high-end artificial intelligence chips) could not continue this pace of growth for much longer.

Eventually demand will decrease. Even if it doesn’t happen soon, the AI ​​market isn’t just about Nvidia; Other, less powerful companies may still be overinflated. Investors were perhaps afraid that Nvidia’s earnings didn’t actually answer any of the questions.

Investors also took a closer look. particularly confusing jobs report and realized that might not say exactly what they initially thought: The headline figure showed much stronger-than-expected hiring in September; This suggests that the worst of the early summer hiring slowdown may be behind us. The unemployment rate may have increased as more workers entered the workforce and continued their job search after the summer break.

Williams’ glass appears to be half empty. But if the Fed takes a glass-half-full approach — especially after minutes from its last meeting released Wednesday showed significant resistance to another rate cut in December — perhaps that rate cut won’t come next month.

Here we are back where we started on Friday. CNN’s Fear and Greed Index It is in “extreme fear” mode and, as you can imagine, it is at its lowest level since April. The VIX volatility index briefly rose to 27, its highest level since…does it even need to be said?

We expect further volatility in the markets until investors receive satisfactory answers to their questions. But with government data delayed by the shutdown, earnings season over and investors about to head off for the holidays, it’s unclear whether those answers will come any time soon.

CNN’s Matt Egan contributed to this report.

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