Stock market fizzles after strong start that was fueled by Nvidia and Walmart
The stock market started Thursday by roaring. By noon, it was whimpering.
A blowout quarterly earnings report from the computer chip giant Nvidia, a strong showing from Walmart and a better than expected September jobs report sent stocks higher at first, as investors’ saw fresh signs that the U.S. economy could prove resilient in the face of gathering headwinds.
The rally was brisk early on, with the the S&P 500, a broad measure of stocks, gaining 1.5% as trading opened. The tech-heavy Nasdaq jumped 2% early on. The Dow Jones Industrial Average rallied 600 points.
All three major indexes were in the red by midday, however. The retreat came as traders dialed back the higher odds seen earlier in the day that the Federal Reserve announce an interest-rate cut at its meeting next month after a solid September jobs report. Cryptocurrencies such as bitcoin also sold off.
“The broad rebound in payrolls suggests diminished risks of a higher unemployment rate,” analysts with Morgan Stanley said in a note published shortly before noon. “We no longer expect a Fed cut in December.”
Stocks have been showing signs of flagging in recent weeks, amid rising questions about how much room the artificial intelligence boom had to run after powering markets through a year of steady gains.
Nvidia has been at the heart of that boom. Its earnings report Wednesday exceeded investor forecasts, and suggested there is still plenty of room for growth in AI. Nvidia’s stock was flat, though, after giving up an earlier surge.
Walmart, the world’s largest retailer and America’s biggest private employer, is widely viewed as a bellwether for U.S. retail and consumer sentiment. So when the company raised its full-year earnings and sales outlook Thursday, investors saw another good sign. Walmart’s stock was more than 6% higher.
The long-delayed September jobs report, which showed that the U.S. had added a sturdy 119,000 jobs in September, had some glimmers of hope for the economy.
Although the unemployment rate ticked up from 4.3% in August to 4.4%, approximately 450,000 workers entered the labor force. Economists view this as evidence that job opportunities are still plentiful, despite a wave of corporate layoffs.
Just prior to the release of Thursday’s jobs report by the Bureau of Labor Statistics, Verizon told employees it planned to lay off 13,000 employees, or approximately 13% of its entire workforce.
The company joined a suite of other blue-chip employers that say they plan to eliminate tens of thousands of jobs, including Amazon, General Motors, IBM, Microsoft, Paramount, Target and UPS.
The details of the jobs report, which captured conditions before the government shutdown as well more recent jobs data, suggested a more mixed picture for the U.S. economy.
Manufacturing shed 6,000 jobs, continuing a trend in a sector the Trump administration has touted as a key target of its economic policies. Transportation and warehousing also saw job losses totaling 25,300. Wage growth slowed, and job totals for July and August were revised downward.
The employment gains in September were concentrated in the health care, hospitality and social assistance sectors.