US Markets Slip as Nvidia Gains Fade and Fed Rate Cut Doubts Rise

Nvidia Gains: The US stock market saw a sharp reversal on Thursday as an early rally collapsed, with investors reassessing bullish expectations following Nvidia’s blockbuster earnings and a stronger-than-expected September jobs report.

After jumping nearly 2.5% in early trade, the tech-heavy Nasdaq Composite slipped 0.9% by the close. The S&P 500 also lost 0.7% after earlier showing gains of up to 1.8%, while the Dow Jones Industrial Average less driven by big tech declined 0.5%.

Nvidia shares initially surged almost 5% after the chipmaking giant delivered stronger-than-expected earnings and a robust fourth-quarter revenue forecast. CEO Jensen Huang said demand for its Blackwell AI processors is “off the charts,” helping cool fears that the recent slowdown in AI-linked stocks signalled lasting weakness. However, the stock later turned negative as market sentiment faded.

Meanwhile, the long-awaited September nonfarm payrolls report showed the US economy added 119,000 jobs much higher than the expected 51,000. But unemployment rose to 4.4% from August’s 4.3%, signalling a mixed labor market.

Following the data release, options traders priced in around 38% odds of a Federal Reserve rate cut in December. While higher than Wednesday’s probability, the figures reinforced growing expectations of a divided Fed, with policymakers split on whether inflation or weakening job growth poses the greater threat.

Thursday’s report was also the first major economic reading since the end of the longest government shutdown in US history. Minutes from the Fed’s October meeting highlighted major differences among policymakers regarding the next monetary move.

In corporate earnings, Walmart delivered upbeat results for the third quarter and raised full-year guidance after beating forecasts on revenue and profit. Shares rose as investors viewed the retail giant’s performance as a measure of consumer strength ahead of the holiday season.

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