Traders at the New York Stock Exchange on October 29. Wall Street faced heavy losses today, fueled by declines in Nvidia and other major AI firms as concerns about inflation and disagreements among central bankers over the U.S. economy emerged, causing investors to reconsider expectations for interest rate cuts.
Today, stocks on Wall Street dropped significantly, with Nvidia and various AI industry leaders taking notable hits. This followed a collective hesitation among investors to expect interest rate reductions, largely due to ongoing inflation concerns and central bank divisions regarding the state of the U.S. economy.
After an unusually long 43-day government shutdown, which unsettled investors and affected the flow of economic data, the U.S. government has resumed operations.
Recently, more Federal Reserve members have voiced doubts about additional rate cuts, and now the markets reflect roughly equal chances for a decrease in borrowing costs come December. Some Fed officials have expressed unease about inflation and mentioned signs of relative stability in the labor market after two rate cuts earlier this year.
Jake Dollarhide, CEO of Longbow Asset Management, raised a fundamental question: “Is tariff-related inflation just a fleeting issue? That’s why some Fed officials are cautious about cutting rates—it’s a gamble either way.”
Investors remained jittery over lofty valuations tied to AI optimism, which impacted high-performing stocks. Nvidia, Tesla, and Broadcom all saw declines.
“There’s a lot of uncertainty about the state of the economy,” Peter Cardillo, chief market economist at Spartan Capital Securities, commented. “What we’re witnessing feels like a market correction, especially in the AI sector, as money shifts around.”
According to early reports, the S&P 500 Index decreased by 113.05 points, or 1.65%, settling at 6,737.87 points. The Nasdaq Composite Index fell 532.74 points, or 2.28%, to 22,873.72 points. Meanwhile, the Dow Jones Industrial Average dropped by 797.29 points, closing at $47,457.53.
Walt Disney Co. experienced a downturn after signaling that it might engage in a protracted conflict with YouTube TV regarding the distribution of its cable channel. In contrast, Cisco Systems saw a rebound after it raised its profit and revenue projections, anticipating increased demand for its networking equipment.
Earlier in the week, the Dow Jones Industrial Average hit record highs, benefitting from investors shifting away from tech stocks to healthcare.
Data from payroll processor ADP revealed that private employers cut over 11,000 jobs weekly through late October. Additionally, the number of retail jobs fell 16% in October compared to last year, indicating persistent weakness in the job market.
Currently, traders are estimating about a 47% chance of a 25 basis-point rate cut in December, a decrease from the 70% chance projected the week before, as indicated by CME Group’s FedWatch tool.
Reports surfaced that APA Corp. gained ground amidst talks of a reverse merger involving Spain’s Repsol and potential partners in energy production.
On the downside, memory manufacturers Western Digital, Seagate, and SanDisk fell after Kioxia Holdings, a Japanese memory maker, reported declining sales and profits.
