Daniel Kaybusiness reporter
ReutersA spate of solid business news in the U.S. should have calmed the market, which has retreated in recent weeks.
But strong sales at artificial intelligence (AI) chip giant Nvidia and the world’s biggest retailer Walmart, better-than-expected September hiring and even a recovery in home sales have so far done little to ease investor fears.
The three major US stock indexes resumed their decline on Thursday, reversing after early morning gains. The S&P 500 ended the day down 1.5%, the Dow Jones Industrial Average fell 0.8% and the Nasdaq fell more than 2%.
Major Asian stock markets also fell on Friday.
Nvidia shares, which had soared in Thursday morning trading, fell more than 3% in New York.
“This reaction is notable because what should have happened didn’t happen,” said James Stanley, senior analyst at StoneX, referring to the sudden disappearance of Thursday’s broad U.S. market rally.
“We need to ask what’s going on beneath the surface.”
In Asia, Japan’s Nikkei stock average fell more than 2.5% after the lunch break, and technology investment giant SoftBank fell more than 10%.
South Korea’s Kospi fell by about 4%. Semiconductor maker SK Hynix’s stock price fell more than 8%, while Samsung’s stock fell nearly 6%.
Hong Kong’s Hang Seng fell nearly 2%.
Bitcoin prices also fell on Thursday, extending recent losses to below $90,000, the lowest level since April. Analysts believe part of this decline is due to concerns about AI’s valuation.
Concerns about an AI bubble continue to swirl, and Nvidia’s results showed the semiconductor giant is performing well amid strong demand for AI chips, sending the stock briefly higher on Wednesday and early Thursday.
CEO Jensen Huang dismissed concerns that AI companies are overvalued. “From our perspective, it looks like something very different,” he said on a conference call with analysts.
But despite Mr. Hwang’s reassurances and blockbuster results for the chipmaker seen as a bellwether of the AI boom, concerns persist on Wall Street, investment analysts say. This month, those concerns have intensified.
Alphabet CEO Sundar Pichai warned in an interview with the BBC this month that there is an “irrationality” in the current AI boom.
Analysts at Oxford Economics said the recent technology depletion signals “a healthy adjustment rather than the beginning of something more threatening.” They warned earlier this week that tech stocks could suffer from profit-taking in the short term, but also said it was “too early to call an end to the AI investment boom.”
At the same time, investors remain nervous about the future direction of interest rates. They are still awaiting key inflation data that was delayed during the U.S. government shutdown, which could determine the pace of the Federal Reserve’s interest rate cuts into next year.
The S&P 500 Index has fallen more than 4% so far in November, its worst month since March.
Stanley said investors are “scrambled” as they grapple with uncertainty about the state of the economy and whether the Fed will be forced to raise interest rates if inflation picks up.
“There is great uncertainty about where inflation is going,” he said. “There’s a lot of opacity.”
Eric Thiel, Comerica Bank’s chief investment officer, said Thursday’s jobs report did little to clarify the Fed’s future decisions on interest rates.
Employers added 119,000 jobs in September, more than double what many analysts expected, and the unemployment rate rose from 4.3% to 4.4%, according to Labor Department figures. Analysts said the mixed data left more questions than answers about whether the Fed will cut rates at its next meeting in December and into 2026.
Thiel pointed to continued adoption of AI and falling interest rates as two important aspects of the economic backdrop that need to remain intact to continue pushing stock prices to new highs.
Rising worries about the AI bubble and inflation could lead to further volatility in financial markets from this month onwards, he added.
“When you have a market that demands perfect prices, you need all the external catalysts behind it to keep that market going higher,” Thiel said.
“Many of these things have been called into question over the past three weeks.”
