Nvidia’s stock experienced a drop of over 3% when the markets opened on Friday, while Tesla shares fell approximately 4%. This decline in technology stocks follows a significant selloff that had already led to major market indexes experiencing their worst day in a month on Thursday. The Dow Jones Industrial Average fell by more than 530 points, or 1.1%, with the S&P 500 dropping 1% and the tech-heavy Nasdaq losing about 1.2%. Other semiconductor stocks also took a hit; shares of AMD sank more than 4%, and Micron Technology dropped around 1%.
In the retail sector, Walmart’s stock decreased by about 2% following the announcement that CEO Doug McMillon will retire early next year. The Dow had recently reached a milestone of 48,000 points, marking a significant achievement this week, but stocks quickly receded as investors’ concerns shifted back to the Federal Reserve’s interest rate policies and the perception of a bubble in AI stock valuations after the end of the longest federal government shutdown in United States history.
Despite the reopening of the government, market traders are facing heightened uncertainties regarding economic indicators that were paused during the shutdown. Carol Schleif from BMO Private Wealth highlighted the challenges posed by incomplete economic data, suggesting that some missed data points may never be made available. There are concerns about how upcoming reports, especially those related to inflation and employment, will shape market sentiment and investor confidence.
Deutsche Bank’s Jim Reid remarked on the volatile week, as the end of the shutdown provided some relief, but anxieties regarding AI valuations and Federal Reserve rate cuts loomed large. Currently, the odds for a 25-basis-point rate cut in December stand at about 54%, a slight rise from the previous day but lower than a week ago.
With the government operational again, market participants must navigate a mix of distorted data indicators alongside an already fraying labor market. The absence of federal data means estimates, particularly in sectors like government and retail, had relied solely on private trackers, leading to concerning projections of job losses and increased layoff announcements driven by corporate cost-cutting measures.
The return of government operations may bring back economic clarity, but the uncertainty surrounding the backlog of data will likely cause market fluctuations in the weeks to come. As investors begin to grapple with the potential implications of these missing indicators, a cautious and strategic approach becomes essential in navigating the evolving economic landscape.