Big swings keep rocking Wall Street, and US stocks erased a huge morning gain on Thursday as skittishness continues to dominate the market following weeks of doubts and erratic moves.
The S&P 500 dropped to a loss of 0.7 per cent after initially soaring 1.9 per cent, which would have marked its best day since May. The Dow Jones was down 231 points, or 0.5 per cent, in early afternoon trade, and the Nasdaq composite was 1 per cent lower.
Wall Street remains very nervy.Credit: Bloomberg
The Australian sharemarket is set for sharp losses, with futures at 5.11am AEDT pointing to a loss of 92 points, or 1.1 per cent, at the open. The ASX added 1.2 per cent on Thursday after Nvidia soothed market fears about an AI bubble with robust earnings and forecasts. The Australian dollar was trading at US64.58 at 5.24am AEDT.
The sharpest losses came again from what used to be the market’s biggest winners. Technology stocks, cryptocurrencies and other areas of the market that had been soaring with nearly relentless momentum, as traders feared missing out on more gains, dropped. Bitcoin fell below $US87,000 ($134,750), down from nearly $US125,000 last month, for example.
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 potential bubble for AI stocks after reporting another big profit for the summer that topped analysts’ expectations, along with a forecast for coming revenue that easily cleared analysts’ estimates. By delivering big profits and indicating more are coming, Nvidia can justify its stock’s price gains and make it look less expensive.
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Given the forecasts that Nvidia gave late on Wednesday, “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 per cent but then dropped to a loss of 1.5 per cent, sending it again 10 per cent below its record. Because it’s the biggest company in the US market by value, Nvidia’s stock has more pull on the S&P 500 than any other company’s.
