Wall Street stunned as stocks suddenly drop like a stone and turn red despite string of good news
All three major Wall Street indexes quickly erased all of their gains mid-day Thursday.
After spending the morning in the green — boosted by Walmart and Nvidia’s banner earnings and a surprisingly positive jobs report — the market dropped like a stone after 10:45am EST.
The Dow gave up more than 1,000 points around noon, a nearly a four percent swing in one day. The Nasdaq and S&P temporarily dropped a full percent in the red.
Wall Street’s swing left analysts dismayed.
For the past two weeks, markets were going through a rough patch as investors started to worry about risky investments in AI.
Well-watched investors like Michael Burry, who became a household name after predicting the 2008 crash and inspiring the film The Big Short, revealed that he shorted AI stocks.
Then, last Tuesday, Masayoshi Son, one of tech’s most–watched investors, revealed he quietly sold off all his Nvidia shares and most of his stake in T-Mobile last month. Those moves sent investors into a multi-day sell-off.
But Nvidia defied the anxiety, raking in $57billion in sales and smashing analyst forecasts of $54.9 billion.
Wall Street was on a tear in early morning Thursday after some banner earnings and a surprisingly positive jobs report. The momentum quickly evaporated mid-day
The positive earnings sent Nvidia’s stocks up as much as five percent in the morning, but it has dropped to a full percent in the red in the afternoon.
Then, Walmart reported revenue of $179.5billion, beating Wall Street expectations of $177.4billion.
Some investors say the positive earnings don’t change Wall Street’s fundamentals.
‘The picture is pretty clear, in that we are in that territory of a bubble,’ Ray Dalio, the founder of Bridgewater Associates, told CNBC on Thursday.
‘But we don’t have the pricking of the bubble yet.’
Investors are also worrying that Thursday morning’s jobs report muddies the water about potential interest rate cuts.
Before the jobs report, they expected the central bank to lower its benchmark next month, which would lower borrowing costs for companies.
But the US economy added 119,000 jobs, defying economist predictions of 50,000.
That slashed the chances of another rate cut, wit traders now putting the odds at just 30 percent.
This is a breaking news story. Updates to come.
