U.S. stocks experienced significant volatility on Thursday, with early gains reversing into steep losses by the end of the day. The S&P 500, after initially rising by as much as 1.9%, ended down 1.6%. The Dow Jones Industrial Average fell by 386 points, or 0.8%, while the Nasdaq composite dropped 2.2%.
The sharpest declines were seen in sectors that had previously been market leaders, including Nvidia and cryptocurrency-related stocks. Bitcoin fell below $87,000, a significant drop from its peak near $125,000 last month.
Recent instability in the market has been attributed to concerns about whether companies such as Nvidia and others benefiting from artificial intelligence trends have become overvalued, and uncertainty about future Federal Reserve interest rate policy.
Nvidia attempted to reassure investors with strong summer profits and a revenue forecast that exceeded analyst expectations. Analysts at UBS led by Timothy Arcuri said, “it is very hard to see how this stock does not keep moving higher from here,” adding that “the AI infrastructure tide is still rising so fast that all boats will be lifted.” Despite an initial increase of 5%, Nvidia’s stock finished the day down 3.2%. As the largest company by market value in the U.S., Nvidia’s movements significantly affect the S&P 500 index.
There remains concern among investors about whether large investments in AI chips and data centers will ultimately lead to substantial profits for major technology companies like Amazon. According to a recent Bank of America survey of global fund managers, a record percentage of investors believe companies are “overinvesting.”
Amazon’s shares mirrored broader tech trends, shifting from an early gain of 2.1% to close down 2.5%. Palantir Technologies also saw its shares swing from a rise of 5.5% to a loss of 5.8%.
Thursday’s volatile trading echoed swings seen earlier this year in April following unexpected trade tariffs announced by President Donald Trump.
On monetary policy, Thursday’s jobs report offered mixed signals but some relief for markets worried about interest rates rising further. Seema Shah, chief global strategist at Principal Asset Management, noted that markets initially interpreted parts of the report positively. The data showed stronger-than-expected hiring in September but also indicated a slight uptick in unemployment—a factor that could prompt the Federal Reserve to consider another rate cut at its December meeting.
Traders currently estimate about a 40% probability of a rate cut next month—an increase from yesterday’s estimate but still less than even odds.
Federal Reserve decisions remain central for Wall Street since expectations for lower rates have helped push stock prices higher this year; however, inflation continues above the Fed’s target level despite two cuts already implemented.
Walmart stood out on Thursday as one of few winners among major stocks; it rose by 6.5% after reporting quarterly sales and profits ahead of expectations.
Losses among crypto-related firms persisted alongside bitcoin’s decline: Robinhood Markets dropped by 10.1%, and Coinbase Global fell by 7.4%.
At closing bell: S&P 500 declined by 103.40 points to finish at 6,538.76; Dow Jones lost 386.51 points ending at 45,752.26; Nasdaq composite decreased by 486.18 points closing at 22,078.05.
In bond markets, yields on U.S government debt eased slightly with the benchmark ten-year Treasury note falling to yield of 4.09% compared with Wednesday’s close at 4.13%.
Internationally, stock indexes rose across Europe and Asia on Thursday; Japan’s Nikkei gained 2.6%, while South Korea’s Kospi increased by nearly two percent.
