The swings hit a crescendo on Thursday, when US stocks initially surged after Nvidia seemed to tamp down worries about a potential bubble in artificial-intelligence technology. But the market quickly dropped to a sharp loss in its biggest one-day reversal since April, when President Donald Trump shocked markets with his “Liberation Day” tariffs.
Despite the strong profit report from Nvidia, whose chips are powering the move into AI, worries are still hanging around about the longer term. Will all those AI chips that Amazon, Meta Platforms and other companies are gobbling up actually yield profits and productivity as big as proponents are envisioning? If not, some investors fear, all the investment won’t be worth it.
AI-linked stocks continued to swing on Friday, helping to drag the rest of the market behind them. Nvidia went from an initial gain to a drop of 4.3 per cent and then swung back and forth before finishing with a loss of 1 per cent, for example. Amazon went from an early loss to a gain of 1.6 per cent.
Bitcoin, meanwhile, briefly plunged below $US81,000 before pulling back toward $US85,000. That’s down from nearly $US125,000 last month and brought it back to where it was in April, when markets were shaking because of Trump’s tariffs.
The vast majority of stocks on Wall Street rose despite such swings, with nearly 90 per cent of stocks in the S&P 500 climbing. Their movements often get drowned out by Nvidia and other Big Tech stocks, whose movements have much more effect on the S&P 500 because of their immense sizes.
“When the largest companies drive most of the losses, the market can look weaker than it really is,” said Brian Jacobsen, chief economist at Annex Wealth Management.
Several retailers led the way. Gap jumped 8.2 per cent after reporting a stronger profit for the latest quarter than analysts expected. CEO Richard Dickson said it saw strong sales trends at each of its Old Navy, Gap and Banana Republic brands.
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Ross Stores rallied 8.4 per cent after it likewise delivered a better profit than expected. CEO Jim Conroy said it saw broad-based growth during the quarter and raised the company’s forecast for an important measure of sales during the holiday season.
Homebuilders were also strong on hopes that lower interest rates could make mortgages cheaper and give a kick to the housing market. D.R. Horton jumped 6.8 per cent, Lennar rose 5.9 per cent and PulteGroup gained 5.2 per cent.
All told, the S&P 500 rose 64.23 points to 6,602.99. The Dow Jones Industrial Average gained 493.15 to 46,245.41, and the Nasdaq composite climbed 195.03 to 22,273.08.
In the bond market, Treasury yields eased on hopes for cuts from the Fed. Traders are now betting on a nearly 72 per cent probability of a December cut, up sharply from 39 per cent a day before, according to data from CME Group. That helped send the yield on the 10-year Treasury to 4.06 per cent from 4.10 per cent late Thursday.
In stock markets abroad, indexes were mixed in Europe after tumbling in Asia following Wall Street’s stunning reversal on Thursday.
Japan’s Nikkei 225 fell 2.4 per cent, and South Korea’s Kospi dropped 3.8 per cent for two of the larger losses.
AP
