An early swoon shook the US stock market on Friday, as Nvidia, bitcoin, gold and other high-flyers swung on an increasingly antsy Wall Street, but it quickly calmed.
After starting the day with a sharp drop of 1.3 per cent, the S&P 500 erased all of it and then meandered up and down before finishing with a slight dip of 0.1 per cent. The Nasdaq composite flipped to a gain of 0.1 per cent, while the Dow Jones trimmed its loss to 309 points, or 0.7 per cent, after earlier being down nearly 600.
AI stocks were again at the centre of the action, a day after dragging Wall Street to one of its worst drops since its springtime sell-off. Nvidia, which has become the poster child of the frenzy around artificial-intelligence technology, began the day with a loss of 3.4 per cent. It then stormed back to a rise of 1.8 per cent and yanked the market in its wake.
Critics have been warning that the US stock market could be primed for a drop because of how high prices have shot since April, leaving them looking too expensive. They pointed in particular to stocks swept up in the AI mania. Nvidia’s stock has more than doubled in four of the last five years, for example, and the chip company is still up more than 40 per cent for this year so far.
Even with sharp swings for the S&P 500 the last couple of weeks, the index that dictates the movements for many 401(k) accounts remains within 2.3 per cent of its record set late last month.
“Occasional market drops are the price of the ticket for the ride,” said Brian Jacobsen, chief economist at Annex Wealth Management.
Outside of tech, Walmart edged down 0.1 per cent after saying CEO Doug McMillon will retire in January in a surprise move. It had been down as much as 3.6 per cent in the morning. McMillon helped the retailer embrace technology more.
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One way companies can tamp down criticism about too-high stock prices is to deliver solid growth in profits. That’s raising the stakes for Nvidia’s profit report coming on Wednesday, when it will say how much it earned during the northern hemisphere summer.
If it falls short of analysts’ expectations, more drops could be on the way. That would have a big effect on the market because Nvidia has grown to become Wall Street’s largest stock by value. That gives Nvidia’s stock movements a bigger effect on the S&P 500 than any other’s, and it can almost single-handedly steer the index’s direction on any given day.
Bitcoin is one of the investments that can get a boost from lower interest rates. It fell below $US95,000, back to where it was in May. It had been near $US125,000 only in October.
The price of gold, meanwhile, sank 2.4 per cent. It shot to records throughout the year as investors looked for something that could protect from high inflation and big debt loads built by the US and other governments worldwide.
With AP
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