New York, NY – A furious early rally on Wall Street fizzled out Thursday as excitement over Nvidia’s blockbuster earnings reversed, sending major indexes sharply lower by the closing bell.
The Dow Jones Industrial Average tumbled 332 points, or 0.7%, erasing an earlier surge of more than 700 points.
The S&P 500 fell 1%, while the tech-heavy Nasdaq Composite slid 1.3% after climbing as much as 2.6% earlier in the day.
At the center of the reversal was Nvidia, whose shares swung from a 5% early gain to a 1.5% loss by afternoon trading, dragging the broader market with them. The chipmaker’s quarterly report easily topped Wall Street expectations for earnings and revenue, while its forecast for the current quarter pointed to continued strength in artificial intelligence demand.
CEO Jensen Huang told investors demand for Nvidia’s Blackwell processors was “off the charts,” adding that fears of an AI bubble were unfounded. But investors showed less conviction, as valuations across the AI sector came under renewed scrutiny amid fading optimism for another Federal Reserve rate cut in December.
Nvidia’s early rally initially boosted AI-linked peers, with Oracle and AMD both rising sharply in premarket trading before slipping into negative territory. By mid-afternoon, shares of Oracle and AMD were each lower, contributing to a sector-wide retreat that weighed heavily on the Nasdaq.
The sudden reversal highlighted growing sensitivity among investors to shifts in rate expectations. With the Fed signaling caution on further easing, traders appeared unwilling to chase high-growth tech names already priced for perfection.
Market analysts said the pullback underscored the fragile balance between corporate earnings strength and macroeconomic uncertainty. Even stellar tech results were not enough to sustain momentum as bond yields ticked higher and rate-cut bets faded.
As of late Thursday, futures markets showed declining odds of a December rate reduction, suggesting traders expect the Fed to hold steady into the new year. The shift dampened enthusiasm for risk assets and led to profit-taking after weeks of market gains.
Key Points
- Nvidia’s stock swung from a 5% early gain to a 1.5% loss, reversing a market-wide rally.
- Major U.S. indexes closed lower as investors lost confidence in a December Fed rate cut.
- AI-related stocks, including Oracle and AMD, joined Nvidia in falling despite strong earnings.