AI Stocks Send Markets Tumbling Amid Volatile Trading
Key Takeaways
- AI-led whiplash sent the Nasdaq down 2.16% and the S&P 500 down 1.56% by the close; the Dow fell 0.84%.
- Nvidia swung from +5% intraday to finish −3.2%; Oracle and AMD also declined.
- U.S. added 119,000 jobs in September vs. 50,000 expected; unemployment rose to 4.4%.
- Stronger labor data dimmed hopes for near-term Fed rate cuts.
- Asia-Pacific markets slid; Japan announced a $135 billion stimulus plan as SoftBank fell more than 10%.
Market Snapshot
U.S. stock markets experienced sharp swings on Thursday as investor sentiment around artificial intelligence (AI) stocks rapidly shifted. The Nasdaq Composite, which had gained as much as 2.6% earlier in the day, ultimately closed 2.16% lower. Similarly, the S&P 500 reversed course from a 1.9% intraday high to finish down 1.56%, while the Dow Jones Industrial Average slipped 0.84% after temporary gains.
AI Leaders Whipsaw
Much of this volatility was driven by dramatic movements in leading AI companies. Nvidia, a key player in the sector, saw its shares climb 5% at one point, only to end the session with a 3.2% loss. Other major AI stocks, including Oracle and AMD, posted comparable declines.
The initial optimism stemmed in part from Nvidia CEO Jensen Huang’s dismissal of concerns over an AI investment bubble, but market anxieties soon resurfaced.
Macro Data Tempers Rate-Cut Hopes
Economic data also played a significant role in market dynamics. The U.S. reported a gain of 119,000 jobs for September, far exceeding analysts’ forecast of 50,000, while the unemployment rate climbed from 4.3% to 4.4%, marking the highest level in almost four years.
Stronger job numbers lessened hopes for an imminent interest rate cut, according to trading data from the CME FedWatch tool. Many investors now expect the Federal Reserve to maintain rates at its December meeting.
Global Ripple Effects
Asia-Pacific
International markets reflected Wall Street’s turmoil, with Asia-Pacific indexes sliding on Friday. Japan’s SoftBank saw its shares drop more than 10%, amplifying regional losses.
In other major economic news, Japan announced a $135 billion stimulus plan aimed at combating inflation and supporting its economy. The country’s core inflation in October reached a three-month high, while exports strongly outperformed forecasts.
Southeast Asia
Elsewhere, Singapore’s Ministry of Trade and Industry revised its 2025 GDP growth outlook upward to about 4%, citing resilient global economic conditions.
Investment Themes
In the investment space, activist investor Boaz Weinstein highlighted opportunities in UK investment trusts, pointing to valuation discrepancies that could benefit selective buyers.
AI Bubble Risks: Beyond Chipmakers
Despite Nvidia’s recent strong earnings report, some analysts caution that the broader risks of an AI investment bubble lie outside chipmakers like Nvidia. They instead draw attention to firms taking on significant debt to expand AI infrastructure, raising concerns about sustainability in the sector.
Headline: AI Stocks Trigger Volatility in Global Markets
Outlook
Investors now face the challenge of navigating stretched valuations, reduced expectations of monetary easing, and lingering doubts about the staying power of the current AI market rally.
