U.S. stocks swung wildly on Nov. 20 and ultimately ended the day deep in the red as a post-earnings rally led by chipmaker Nvidia (NVDA) faltered.
The technology-laden Nasdaq Composite index ended down 2.16% after spending the morning of Nov. 20 up as much as 2.6%.
The blue-chip Dow Jones Industrial average went from being up 700 points on the day to closing nearly 500 points lower in a wild swing that exceeded 1,000 points in a few hours.
Analysts and market commentators are blaming the gyrations on Nvidia, which is the world’s largest publicly traded company with a market capitalization of $4.5 trillion U.S.
After posting strong third-quarter financial results, Nvidia’s stock opened up 5%, lifting the market with it. However, Nvidia’s rally faltered and the stock ended the day down 3%.
Nvidia’s strong print and bullish forward guidance were not enough to allay growing concerns among investors of a bubble in artificial intelligence (A.I.) stocks amid high valuations.
At the same time, a delayed U.S. jobs report for the month of September was released, showing a largely resilient labour market.
The stronger-than-expected jobs report dampened expectations that the U.S. Federal Reserve will deliver a 25-basis point interest rate cut in December as markets want.
Futures markets are now pricing in a 30% chance for an interest rate cut from the U.S. central bank at its Dec. 10 policy meeting.
Adding to the bearish sentiment were some disappointing earnings reports from leading retailers such as Home Deport (HD) and Target (TGT).
Weak sales figures from the retailers have fueled worries that U.S. consumers are pulling back their spending amid rising prices fueled by tariffs.
The end result is a gloomy outlook for U.S. equities, which typically rise into year’s end in what’s often called a “Santa Claus Rally.”
U.S. futures are pointing to a lower open for stocks again on Nov. 21.
The S&P 500 is currently down 5% this month in what is shaping up to be the worst November for the benchmark index since the 2008 financial crisis.
Related Stories
