U.S. stock markets experienced significant volatility on Thursday, marking one of their most dramatic days in recent months. The Nasdaq Composite closed down 2.16% after earlier in the day climbing as high as 2.6%. Similarly, the S&P 500 fell by 1.56% despite achieving a peak increase of 1.9%, and the Dow Jones Industrial Average saw a decrease of 0.84% from an intraday high of 1.56%.
The catalyst for much of this volatility was Nvidia, the leader in the AI chip sector. Its shares soared by 5% before plunging to close the day down 3.2%. Other stocks linked to artificial intelligence, such as Oracle and AMD, exhibited comparable fluctuations, reflecting initial investor reassurance following Nvidia CEO Jensen Huang’s comments on the AI bubble. However, concerns quickly resurfaced, contributing to the day’s drastic changes.
Adding to the market’s pressures was the release of September’s U.S. jobs report. While the information was delayed, suggesting possible changes in the economic landscape since the data was compiled, the results came in significantly better than anticipated. This unexpected improvement has dampened expectations for a Federal Reserve rate cut, prompting traders to adjust their predictions to favor the likelihood of rates remaining steady through December, as indicated by the CME FedWatch tool.
Investors are now navigating through elevated valuations with the prospect of fewer rate cuts ahead. While holiday optimism remains on the horizon, expectations for a timely economic uplift appear to have diminished, creating uncertainty as the year-end approaches. Despite these challenges, there is hope that resilience within the market may foster a recovery as the year concludes.