Stock markets fall, erasing earlier gains amid AI, interest rate fears
Global News
After initially soaring toward what seemed like its best day since May, the S&P 500 erased its entire early surge. The Dow Jones and Canada's S&P/TSX index also fell.
Jarring swings keep rocking Wall Street, and U.S. stocks erased a big morning gain to drop on Thursday as the market remains skittish following weeks of doubts and erratic moves.
After initially soaring toward what seemed like its best day since May, with an early surge of 1.9%, the S&P 500 erased all of it and fell 1.6%. The Dow Jones Industrial Average dropped 386 points, or 0.8%, and the Nasdaq composite sank 2.2%.
In Canada, the main S&P/TSX composite index fell more than 370 points, weighed down by losses in the basic materials sector.
The sharpest losses again hit what used to be the market’s biggest winners. Nvidia, cryptocurrencies and other areas that had soared with nearly relentless momentum, as traders feared missing out on more gains, forced the market lower. Bitcoin dropped below $87,000, down from nearly $125,000 last month.
The market had been shaky coming into Thursday, largely because of twin worries: Nvidia and other superstar stocks caught up in the frenzy around artificial-intelligence technology may have simply shot too high, and the Federal Reserve may be done delivering the invigorating cuts to interest rates that Wall Street loves.
Nvidia initially appeared to tamp down the worries about a bubble for AI stocks after reporting a big profit for the summer, along with a forecast for coming revenue that easily cleared analysts’ expectations. By delivering strong profits and indicating more are coming, Nvidia can justify its stock’s price gains and make it look less expensive.
Given Nvidia’s forecasts, “it is very hard to see how this stock does not keep moving higher from here,” according to analysts at UBS led by Timothy Arcuri. They also said “the AI infrastructure tide is still rising so fast that all boats will be lifted.”
Nvidia jumped to an early gain of 5% but then dropped to a loss of 3.2%. Because it’s the biggest company in the U.S. market by value, Nvidia’s stock has more pull on the S&P 500 than any other company’s.
