Wall Street watched its Thursday morning rally disappear by midday as investors grappled with conflicting signals about the health of the AI boom and the Federal Reserve’s willingness to cut rates.
The Dow slipped 150 points, while the S&P 500 erased its early gains and plunged nearly 2.5% in just 80 minutes despite Nvidia’s strong earnings.
Meanwhile, a mixed jobs report crushed hopes for a December rate cut, leaving traders scrambling to reassess their bets in a fragile market that refuses to hold onto any conviction for long.
The day started with genuine excitement. Nvidia delivered third-quarter earnings that crushed expectations and offered guidance that beat Wall Street forecasts.
CEO Jensen Huang declared demand for the company’s new Blackwell chips was “off the charts,” and the stock surged nearly 5% in early trading, the kind of move that typically fuels a broad market rally. It didn’t last.
The AI bubble anxiety won’t quit
Nvidia’s reversal was swift and brutal. The stock flipped from up 5% to down nearly 2% by midday, dragging a slew of semiconductor names and AI stocks lower with it.
This wasn’t simple profit-taking. Investors, still spooked by months of debate over whether artificial intelligence spending has gotten out of hand, used the earnings as a moment to bail out.
Palantir Technologies fell 5.5%, while AMD and Oracle dropped roughly 5% each. The broader tech sector, measured by the Technology Select Sector SPDR Fund, lost 1.6%.
What’s striking is that Nvidia’s quarter was genuinely impressive. The company’s fourth-quarter forecast was stronger than expected, and analysts like those at Jefferies even raised their price targets.
Yet the market couldn’t hold the rally. This suggests something deeper than just standard earnings reactions is at play; the AI trade has become psychologically exhausted.
Every strong data point gets greeted with simultaneous buying and selling, as if traders are afraid to commit.
The broader picture reflects this unease. November has been brutal for tech stocks, with the S&P 500 down about 3% and the Nasdaq down nearly 5% for the month.
That kind of weakness doesn’t disappear just because one company beats earnings.
Jobs data kills December rate-cut dreams
The real damage came from the September employment report, delayed due to the government shutdown.
The Labor Department reported 119,000 new jobs, stronger than the consensus estimate of 50,000.
Sounds bullish, right? Except the unemployment rate ticked up to 4.4%, creating an odd economic signal that spooked rate-cut traders.
Higher job growth usually prevents the Fed from cutting rates. That’s exactly what happened. Market odds of a December rate cut collapsed to below 40%, down sharply from the previous day.
Fed minutes released earlier in the week had already shown deep divisions among policymakers about whether to cut at all in December.
The mixed data left traders uncertain about the Fed’s next move. Is the economy slowing or not? Are jobs still solid or softening? Nobody seemed to know, and uncertainty made holding risk assets feel uncomfortable.
Walmart delivered the day’s few bright spots, surging 6% after beating earnings expectations and raising guidance. But one retailer’s win couldn’t overcome the damage from disappointing AI momentum and fading rate-cut hopes.
Until the Fed’s direction becomes clearer and the AI rally finds a solid footing, every market bounce risks another sudden reversal.
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