Wall Street falls as Nvidia slides and investors worry that Fed could slow rate cuts
Wall Street finished sharply lower Thursday with Nvidia, and other AI heavyweights as investors scaled down expectations of rate cuts due inflation concerns and disagreements among central banks about the U.S. economic health.
After a 43-day record shutdown, which had caused investors to worry and disrupted economic data flow, the U.S. Government reopened.
In recent days, a growing number of Federal Reserve officials have expressed reluctance about further rate cuts. This has pushed the odds on financial markets for a decrease in borrowing costs by December near parity. Fed officials have recently spoken about their concerns over inflation and the relative stability of the U.S. labor market following two interest rate reductions this year.
The fundamental question to ask is: Is tariff inflation temporary and one-off? Jake Dollarhide is the chief executive officer at Longbow Asset Management, located in Tulsa. It's a gamble, either way.
Investors worried about high valuations fuelled by artificial intelligence optimism caused shares to fall for some of the strongest performers on the U.S. Stock Market in recent years.
Nvidia and Broadcom both lost ground.
There are many uncertainties regarding the state of the economic situation. "We're experiencing a slight correction in the AI market and are seeing a market rotation," says Peter Cardillo. He is the chief market economist of Spartan Capital Securities, based in New York.
The preliminary data shows that the S&P 500 fell 113.05, or 1.65% to 6,737.87, and the Nasdaq Composite dropped 532.74, or 2.28% to 22,873.72. The Dow Jones Industrial Average dropped 797.29, or 1.64% to 47,457.53.
Walt Disney fell after the media giant indicated it was preparing to fight YouTube TV for distribution of its cable channel. Cisco Systems surged after increasing its full-year revenue and profit forecasts. The company is betting on the demand for their networking equipment.
The Dow Jones Industrial Average closed at record highs on Tuesday and Wednesday. This was due to investors moving their money from technology stocks into the health sector.
ADP, a payroll processor, reported that private employers lost over 11,000 jobs per week from late October to the end of November. Indeed Hiring Lab slide shows a drop of 16% in retail job postings from October last year, which indicates a continued weak labor market.
According to CME Group’s FedWatch tool, traders are pricing in a probability of 47% for a rate cut of 25 basis points in December. This is lower than the 70% last week.
APA Corp gained a profit after a report revealed that Repsol, a Spanish energy company, is looking at a reverse merger with its upstream unit and potential partners. This includes the energy producer.
Western Digital, Seagate, and SanDisk all dropped in value after Japanese memory maker Kioxia Holdings announced lower sales and profits.
(source: Reuters)
