Tech Stocks Rebound, Then Plunge as Nvidia Leads Sharp Market Reversal
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The US stock markets began the day with gains, fueled by Nvidia’s strong earnings and favorable job data. The Nasdaq Composite and S&P 500 both posted gains. The Dow Jones Industrial Average also saw gains. These gains helped the Nasdaq and S&P 500 to go positive over the past 5 trading days, while the Dow was still set for a weekly loss.
The Bureau of Labor Statistics (BLS) released its September jobs report, showing that the U.S. economy added 119,000 jobs, surpassing expectations. The unemployment rate rose to 4.4%, marking an increase from August’s 4.3%. The number of job openings remained steady.
Nvidia (NVDA) reported strong earnings, managing expectations effectively and provided a positive outlook. The company expressed “disappointment” regarding the situation in China, suggesting continued headwinds in that market. Walmart (WMT) reported a third-quarter earnings beat and raised its full-year forecasts. The company’s performance demonstrated resilience amidst economic uncertainty. Taiwan Semiconductor Manufacturing (TSMC) shares jumped significantly on the news of Nvidia’s results, due to TSMC’s role as the primary supplier of chips for Nvidia’s AI products. Tech stocks in Taiwan and South Korea also surged, mirroring the positive sentiment surrounding Nvidia’s earnings.
The September jobs data prompted a significant increase in expectations for interest rate cuts by the Federal Reserve in December, based on options trading activity. The probability of a 25-basis point cut rose to around 42%. Nvidia’s strong performance helped to alleviate concerns about an “AI bubble.” Nvidia remains a central player in the ongoing AI revolution, and its performance heavily influences market sentiment. The demand for semiconductors and, consequently, for Taiwanese chipmakers like TSMC, is a major driver of many of these tech stocks. Walmart’s results highlight the continued, though still uncertain, strength of the retail sector.
