The Nasdaq Composite finished down 2.16% after being up as much as 2.6% in the morning. The S&P 500 also experienced such wild movements (unfortunately, not in the opposite direction) and lost 1.56% at the end of the day after it had gained 1.9%. The Dow Jones Industrial Average, meanwhile, followed the same trajectory, closing 0.84% lower after a rise of 1.56% during the day.
Nvidia was at the center of the turmoil. The stock of the future-proof AI chip manufacturer reached a high of 5% before it fell from that level to a close down of 3.2%. If you angled the movement of other AI stocks such as Oracle and AMD, they would have moved quite the same way suggesting that during the initial stage of the CEO Jensen Huang’s rejection of the AI bubble narrative, investors were reassured but their concerns could not be silenced for long.
The U.S. jobs report for September also contributed to the strain on the market. Today’s economy might be very different from what it was two months ago, but the data was very delayed and the numbers were much better than expected. The further tightened rate cut expectations; traders raised their bets that U.S. Federal Reserve officials would keep interest rates in December, as per the CME FedWatch tool.
Stretched valuations are now the new normal for investors along with one less rate cut on the horizon. Holiday optimism is still scheduled, but the time frame for good mood to come is looking less generous than expected.